Stocks were tested on Friday and came through with flying colors. Despite one heck of a miss for May’s employment report, 38,000 vs. 160,000 expected, the S&P 500 closed a smidgen lower after a rousing rally off its intraday lows.
The past week of chop has allowed many stocks to digest their gains, build bases and prepare for another leg higher. Indeed, the pop greeting investors in Monday morning trading suggests the next advance may well be upon us.
It is with that backdrop that we offer up three stellar stock dips demanding the attention of the bulls.
This hat trick boasts low-risk opportunities bursting with upside potential.
Stock Dips to Buy: Netflix, Inc. (NFLX)
Since plumbing the depths after its last earnings release, Netflix, Inc. (NFLX) has staged a notable recovery alongside the tech sector comeback in recent weeks.
NFLX stock popped some 20% in May, retaking the 20- and 50-day moving averages in the process.
A mild bout of profit-taking ushered in a four-day pullback last week, providing a lower-risk entry for sidelined bulls looking to get in on the action. The retracement was accompanied by low volume, suggesting the down days lacked any type of momentum worth worrying about.
If you think the Netflix stock recovery continues for a while yet, snatch up the Aug $100/$110 bull call spread for around $4. It’ll more than double your money if Netflix rises above $110 by expiration.
Stock Dips to Buy: Advanced Micro Devices, Inc. (AMD)
Advanced Micro Devices, Inc. (AMD) is front and center of the semiconductor surge. Semi stocks the land over have been flying, and AMD stock is no exception. Heck, the stock has doubled in the past three months alone.
Last week’s dip was a garden variety pullback, nothing more. And as of this morning, AMD has officially pivoted and turned higher once more.
Don’t overthink this one: Simply climb aboard and look for a rally back to the prior highs of $4.70. Bail below $4 if the rally stumbles.
Given AMD stock’s uber cheap price tag, no option trades are needed. Simply buy shares.
Stock Dips to Buy: CME Group Inc (CME)
CME Group Inc (CME) rounds out our list with a nice little dip of its own. Last month’s ascent was sufficient in carrying CME stock well into bullish territory. With the 20-day and 50-day moving averages now rising, buyers have wrested control of everything but the long-term trend.
Their conviction was tested Friday as a heavy decline in the stock price was quickly bought up, creating a potential pivot perched at the 20-day MA. Look for a break of Monday’s high to confirm the support formation and signal a new advance is upon us.
The century mark is beckoning and CME stock isn’t one to ignore such promptings. Consider buying the CME Sep $95 calls to profit from its continued advance.
At the time of this writing Tyler Craig held no positions on any of the aforementioned securities.