Stocks are going to continue to vacillate with some determination towards making a correction. That said, the charts are revealing a number of stocks begging to be bought now, or setting up as perfect “buy the dip” candidates.
This morning we’ll look at one screaming buy and two “buy the dip” candidates in Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), Nvidia Corporation (NASDAQ:NVDA) and Micron Technology, Inc. (NASDAQ:MU).
Ariad Pharmaceuticals, Inc. (ARIA)
Ariad Pharmaceuticals stock took a turn higher yesterday on heavy volume as the stock broke through its top Bollinger Band in early trading. The move drew more buyers into the crowd, pushing ARIA stock to a close above that same band.
The aggressive break higher is similar to the move that we saw in late July when Ariad shares surged 40% in less than two weeks after breaking its top Bollinger Band then, also on heavy volume.
Momentum on ARIA stock has been among the strongest in its sector, and the recent buying will add to that. Given the break above $10 (round numbered resistance), Ariad now is at the top of technical traders’ buy lists and likely to make another run similar to the one earlier this summer.
Nvidia Corporation (NVDA)
Nvidia has been on our buy list for more than a year as the semiconductor company continues to impress with its expansion into phones, household devices and video products. NVDA stock is up a whopping 82% year-to-date and doesn’t want to stop, but shares are taking a rest.
NVDA hit a wall at $64 recently and started a consolidation phase that just finished a test of its 50-day moving average. This trendline has been amazing support for shares since they moved above it in February.
This time, we expect more of the same with support for the shares at $58 — a level that most traders will look at as an opportunity to buy the dip on Nvidia at a 10% discount from its recent highs of $64.
A move to this level also will trigger an oversold condition for the stock while maintaining positive momentum readings — a good mix for bullish deal hunters.
Micron Technology, Inc. (MU)
Another potential target for dip-buyers is Micron Technology. MU, along with most of the semiconductor industry, has been outperforming the market as investors move from typical safety and into tech.
Micron shares stalled out after hitting their top Bollinger Band at $17.50 last week. From there, MU started a consolidation that has shaved about 5% from the stock’s value. As of now, our chart analysis suggests shares are about halfway through the decline they’ll likely see before buying support kicks in.
MU stock should see some technical buying start to sway the trend higher again as the price encroaches the $16 level, gaining strength at $15.50. This is where the stock’s 50-day moving average will come into play with some heavy technical support. At a $15.50 print, the traders will be buying Micron at a 13% discount — more than enough to free up some profitable upside for a short-term trade.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
