Active traders in search of quality stocks to buy should focus on two things: a solid chart pattern and a low-risk, high-reward opportunity. And typically the first is what leads to the second.
Fortunately for stock bulls, last week’s broad market pullback delivered opportunities on both fronts. A brief bout of profit-taking ushered the S&P 500 to as logical a buy point as any — the rising 20-day moving average. This smoothing mechanism is often a gathering ground for bargain hunters. There they lie in wait for a chance to grab shares at a discount.
Last week they received their chance. And it wasn’t squandered. The Thursday-Friday price pop for the S&P confirmed dip-buyers remain alive and well. And it wasn’t just the broad market index that developed an attractive price pattern. A handful of stocks followed suit by forming low-risk, high-reward opportunities of their own.
Here are three of the best-looking stocks to buy for the week ahead.
Best Trades on Wall Street: JPMorgan (JPM)
We begin with the banks. Since vaulting higher after the State of the Union address, the financial sector has been in pullback mode. JPMorgan Chase & Co. (NYSEARCA:JPM) shares tagged a new all-time high at $93.98 and have since retreated to their rising 20-day moving average.
With a rising 50-day and 200-day moving average resting below along with numerous potential support levels, this JPM stock dip should be viewed as a gift from the gods.
How far JPM retreats before its next advance remains to be seen. No need to guess the turning point. Simply wait for upside confirmation. For now, use a break above Friday’s high at $92 for your trigger.
Buy the JPM May $90 calls for $3.60.
Best Trades on Wall Street: Boeing (BA)
Boeing Co (NYSE:BA) shares have been flying high. February’s ascent was relentless scoring 13 out of 14 up days at one point. But as is always the case, profit-taking finally swooped in to crash the party. With last week’s retreat, BA stock has now returned to its rising 20-day moving average.
There’s no need to bet against Boeing’s trend here. Dips have been buyable for months on end, and this one should be viewed no differently. Since Friday’s down candle was large, it’s best to wait for one more trading session before deciding on an entry point.
After Monday’s close, use a break of the day’s high to trigger you into the trade over the coming week. The higher price tag of BA stock might make a long call purchase unpalatable for many, so let’s go with a long call spread. Buy the May $175/$185 call spread for around $4.70.
Best Trades on Wall Street: DuPont (DD)
E I Du Pont De Nemours And Co (NYSE:DD) rounds out this week’s stocks to buy with a breakout setup. Since last fall, DD stock has carved out a nice little uptrend with rising moving averages across the board. Since its late-January earnings announcement, DD has accelerated to the upside.
Numerous accumulation days have accompanied the uptrend. These high-volume up days suggest heavy interest by institutions and are likely to continue propelling DD stock higher.
Last week’s market pullback created a mini-ascending triangle in Dupont that triggered on Friday. Now is as good a time as any to get in on the action. Buy the April $80 calls for $2.40.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.