While the S&P 500 Index remains stuck in snooze mode, bullish chart patterns have quietly multiplied beneath the surface. We’re talking quality pullbacks and consolidation setups offering low-risk entries in a wide variety of stocks in uptrends.
Remember, pauses like those seen in indices across the board in recent weeks allow overbought stocks a brief respite from their ascension. Mild profit-taking arises as shares change hands from fattened bulls happy to harvest gains to new buyers seeking further fortunes in the best charts Mr. Market has to offer.
Today’s trio features a pair of high-quality pullbacks and one absolutely beautiful symmetrical triangle pattern just bursting with potential.
So, don the glasses and prepare to feast your eyes on three of the best setups traders are watching for the week ahead.
Stocks to Buy: Ambarella (AMBA)
Ambarella Inc (NASDAQ:AMBA) stock has been on fire over the back half of the year. Spurred by better-than-expected earnings during May’s announcement, AMBA has more than doubled from its lows earlier this year.
Losses have been reclaimed, moving averages re-mounted. Ambarella stock now sits soundly atop the 200-day, 50-day and 20-day moving averages. Last week’s retracement ushered shares right to a potential support level delivering a low-risk entry in the process.
The time is ripe for bullish AMBA plays. Consider buying the Nov $70 calls for $4.50.
Stocks to Buy: Facebook (FB)
Facebook Inc (NASDAQ:FB) shares have been rising this year. The lift has been gradual, yes, but relentless with every dip bought and every breakout delivering profits.
The market gods hit the pause button for FB stock a month ago and they have yet to select the play button. But if recent chart patterns are any indication, the time for trend resumption is nigh.
Facebook has formed a classic symmetrical triangle suggesting a volatility compression in its share price. Like all coiled springs, this one is building energy for a pop.
If you think the uptrend eventually exerts its dominance, look for an upside breakout over $130.
Look to buy FB Dec $130 calls for around $6 following the trigger.
Stocks to Buy: FedEx (FDX)
FedEx Corporation (NYSE:FDX) rounds out today’s selections with a clean bull retracement pattern. Its latest advance delivered a higher pivot high on increasing momentum.
Pullbacks following such a rousing rise provide some of the best entry points and FDX is no exception.
Last week’s retracement stopped short of the gap fill area suggesting the consensus for the value of FDX stock continues to rise. In early trading Monday morning shares of FedEx are already popping above Friday’s high signaling its next upswing has begun.
Grab Dec $175 FDX calls for around $5.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.