With market complacency shattered and price trends tattered, it’s easy to abandon any and all bullish ideas. But that would be a mistake! If there’s one silver lining to the ruckus, it’s that strong securities are now much easier to spot for those seeking stocks to buy. While the lion’s share of the market breached vital support levels and upended their daily uptrends, some did not.
It’s this smaller group of stalwarts that interests me today. Many traders believe the stocks that hold firm during market corrections are the first to lead when whatever hobgoblin spooking asset prices is finally felled. Sometimes the source of their relative strength is rosy fundamentals or an earnings release that’s lifting the stock above the crowd. Other times the culprit has to do with sector strength.
Regardless of the reason, today’s trio of stocks to buy held up very well last week. And with their uptrends still very much intact, they all present interesting setups for the week ahead.
Stocks to Buy Amid the Turmoil: Ebay Inc (EBAY)
eBay Inc (NASDAQ:EBAY) entered February with a bang, vaulting 14% on earnings. The timing of the pole-vault was fortuitous because it’s allowed eBay to pullback considerably without breaching any pivotal support zones.
In fact, all last week’s drubbing did was fill the earnings gap, returning the stock to a potential support level. Spectators regretting not having bought the stock before the earnings release now have a second shot to scoop up shares.
Friday’s bullish reversal candle at the gap-fill area and rising 20-day moving average help confirm that buyers are already entering the waters.
Buy the April $42 calls for $2.20.
Stocks to Buy Amid the Turmoil: Netflix, Inc. (NFLX)
The path in Netflix, Inc. (NASDAQ:NFLX) shares is similar to eBay. Its latest ascent was driven by a powerful earnings gap. And, due to its lofty perch, last week’s drubbing translated into nothing more than a garden-variety pullback that returned NFLX to a potential support level. Friday morning’s free-fall resulted in a partial gap fill before buyers struck back.
With the price trend across all time frames still pointing higher, we can’t help but view this dip as a buying opportunity. Because NFLX has a rich price tag and high implied volatility, let’s go with a bull put spread play.
Sell the March $220/$215 bull put spread for $1.00
Stocks to Buy Amid the Turmoil: Target (TGT)
Before last week’s volatility surge, retail stocks were on the mend. Target Corporation (NYSE:TGT), in particular, was rising from the ashes reclaiming lost ground in the process.
Although its two-week retreat broke the 20-day moving average, it wasn’t able to breach the 50-day. Indeed, buyers stepped up to defend the 50-day moving average twice last week. Both victories led to significant rebounds.
If you’re willing to bet buyers can continue to defend their turf, then sell the March $65/$60 bull put spread for 65 cents. Provided TGT stock sits above $65 at expiration, you will capture the entire credit.
As of this writing, Tyler Craig held bullish options positions in NFLX. Want more education on how to trade? Check out his trading blog, Tales of a Technician.