Stock prices are holding steady into the week ahead despite the unexpected missile strikes into Syria and Friday’s knee-jerk flight to safety. Chart watchers are eyeing the symmetrical triangle pattern forming in the S&P 500.
It’s a pausing pattern denoting indecision, a stalemate between buyers and sellers. And with the apex looming, I’m betting this week we’ll finally see some resolution.
With the longer-term trend of U.S. equities still pointing higher, the odds favor an upside break. And, fortunately, bullish setups aplenty are still beckoning to would-be buyers. Today’s selections feature a pair of pullbacks and one sexy looking breakout.
All three boast low-risk opportunities that should trigger if buyers finally wrest control of the market this week. So let’s hop to it. Behold, three of the best trade setups on the street.
3 Best Trade Setups on the Street: Best Buy (BBY)
Best Buy Co Inc (NYSE:BBY) starts us off with a fine looking bull flag trade. The once-struggling retailer has seen its stock chart improve substantially in recent years. It enters the week locked in an uptrend on all major time frames. So say the rising 200-day, 50-day, and 20-day moving averages.
BBY stock staged a strong breakout in late March which carried shares just shy of $50. Last week’s light volume retracement is providing a classic buy-the-dip setup for spectators looking to get in on the action.
Buy the May $47/$50 bull call spread for $1.56.
3 Best Trade Setups on the Street: Southwest Airlines (LUV)
Southwest Airlines Co (NYSE:LUV) ended last week with a surge into the weekend. High volume accompanied the strong bullish candle, suggesting institutional money flow was afoot. The jump carried LUV stock to near-term resistance at $54.80.
The 50-day moving average also looms overhead in the same area. A break above this level will signal the recent correction in LUV has finished and its next up-leg is upon us. Previous resistance near $60 is a logical intermediate target should LUV stock really take flight.
On a break of $54.80, buy the May $55 calls for around $2.15.
3 Best Trade Setups on the Street: Salesforce (CRM)
Salesforce.com, Inc. (NYSE:CRM) rounds out today’s hat trick with a picture-perfect retracement pattern. And I do mean picture perfect. Last week, CRM stock scored a rousing breakout on heavy volume. The $84 zone had been significant resistance for over a year, so its failure should have would-be buyers taking note of this trade setup.
Fortunately for those afraid to chase, CRM has quietly receded to its breakout zone. The now two-and-a-half down days have transpired on light volume, suggesting mild profit-taking which should be easy to reverse once buyers rush back in.
Buy the May $85/$90 bull call spread for $1.60.
At the time of this writing, Tyler Craig had no positions in any of the aforementioned securities.
