The steady beat of new all-time highs continued for stocks last week. The large-cap-laden S&P 500 catapulted to the psychological 2,400 level before retreating amid mild profit-taking.
Bearish opportunities are scarce these days, what with uptrends dominating the landscape and all. Sure, the worm will eventually turn, but good luck nailing the timing. Top picking is a dangerous game. It’s a thrill when done right, but the odds of success are minimal.
So rather than throwing out some contrarian plays, how about we take a look at the best stocks on the board heading into the new week? And by “best stocks,” I’m talking those boasting low-risk, high-reward chart patterns. The kind where the price charts favor higher prices. Not only are today’s selections steeped in uptrends, they’re also either poised to break above key resistance levels or rebound off of support following a price retracement.
Behold, three of the best stocks on the Street.
The Best Stocks on the Street: Disney (DIS)
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Walt Disney Co (NYSE:DIS) shares kick us off with an attractive breakout trade in the making. The mouse house has been in base building mode for the past six weeks.
Despite the brief pause, it’s longer-term and intermediate-term uptrends are still pointing higher. Look no further than the 200-day and 50-day moving averages for confirmation. The key price threshold to watch this week is $112, which has thus far kept a lid on DIS stock.
With Friday’s bullish engulfing candle, it appears bulls are staging a breakout attempt. If you’ve been looking for an excuse to jump aboard DIS, a breach above $112 is as good a reason as any. Consider buying the May $110/$115 bull call spread for around $2.35 once resistance gives way. The risk is limited to $2.35, while the reward is capped at $2.65.
The Best Stocks on the Street: Mobileye (MBLY)
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Next up on our best stocks list is Mobileye NV (NYSE:MBLY). MBLY stock has been a favorite among the momentum crowd due to its volatile nature. While the Jerusalem-based company has followed a circuitous route to nowhere since its 2014 IPO, its range has been littered with tradeable uptrends and downtrends.
Since the turn of the year, an uptrend has emerged. The series of higher peaks and valleys has been sufficient to reverse all its major moving averages higher. Last week’s bout of profit-taking carried MBLY shares to a low-risk entry point near the rising 20-day moving average. And with Friday’s pop, the next advance may have already begun.
Look for MBLY stock to make a run toward $50 over the coming weeks. Implied volatility for its option contracts is elevated, so I suggest a call spread purchase over buying options outright. Buy the April $45/$50 bull call spread for around $2.25. The risk is limited to $2.25, while the reward is capped at $2.75.
The Best Stocks on the Street: Celgene (CELG)
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Biotech stocks have awoken, and Celgene Corporation (NASDAQ:CELG) is leading the charge. With last week’s surge, CELG stock was able to bust above a critical resistance zone. High volume accompanied the rally, suggesting it was the real deal.
After a slight pause on Wednesday and Thursday, Celgene shares rebounded nicely on Friday, ending the week with a solid showing by the bulls.
The $127 level is beckoning, and CELG shares seem all too willing to follow the prompting. With implied volatility at the lowest levels of the year, CELG options are cheap. Buy the April $125 calls for around $3.40. The risk is limited to the initial $3.40 debit, while the reward is unlimited.
At the time of this writing, Tyler Craig didn’t hold positions on any of the aforementioned securities.
