3 Big-Cap Tech Stocks to Buy

Advertisement

tech stocks - 3 Big-Cap Tech Stocks to Buy

Source: Shutterstock

The market gods are smiling at spectators in the technology sector this week. Their pleadings for a pullback in one of the hottest areas of the market have been heard and answered. The Nasdaq scored a picture perfect four-day retracement last week returning many of the Street’s strongest trends to support zones.

Buying uptrends at support zones is the name of the game for tactical traders. Price patterns like these provide attractive risk-reward opportunities. Placing stop losses below support offers a swift exit if wrong. And if the uptrend does continue, then the profits can be significant.

My weekend scanning of the tech sector revealed quality trades aplenty. Here are three of the best.

3 Big-Cap Tech Stocks to Buy: Apple (AAPL)

Ever since Apple (NASDAQ:AAPL) won the race to a $1 trillion market cap, it’s been on fire. Before last week, AAPL’s previous two corrections were mild pauses instead of pullbacks. These types of consolidation patterns are bullish and not surprisingly the subsequent breakouts led to record prices.

Last week, sellers finally sunk their teeth into Apple stock. The three-day pullback has returned the stock to its rising 20-day moving average. It’s a dip that was born to be bought. Momentum traders across the land will have AAPL on their radar this week, so don’t be surprised if it gets gobbled up quickly.

Source: OptionsAnalytix

The implied volatility rank of 63% has me eyeing bull put spreads. Sell the Oct $205/$200 bull put for 60 cents or better.

3 Big-Cap Tech Stocks to Buy: Amazon (AMZN)

The setup in Amazon (NASDAQ:AMZN) is similar to its predecessor. I guess trillion-dollar market cap companies are supposed to pal around, eh? The latest upswing in AMZN shares scored a higher high on increasing momentum. Pullbacks following such a strong ramp are always buying opportunities.

Previous retracements have bottomed out near the 20-day moving average, and I see no reason why this one shouldn’t as well. Market conditions remain benign, and the technicals are firm.

Source: OptionsAnalytix

For a free trial to the best trading community on the planet and Tyler’s current home, click here!

The higher price tag for AMZN shares doesn’t need to be a budget buster. With option spreads, we can build a trade for a few hundred bucks. Buy the Nov $1970/$2000 bull call spread for $15 or less.

3 Big-Cap Tech Stocks to Buy: Salesforce.com (CRM)

Salesforce (NYSE:CRM) rounds out today’s tech stock trio with yet another bull retracement pattern. The response to its recent earnings release was muted, but we’ve seen many similar reactions to previous announcements, and they did little to derail its powerful trend.

I particularly like the relative strength on Friday. While the entire tech sector gave back the early mornings gains, CRM held firm and closed near the high of the day. While one day does not a trend make, it’s a good reason to have CRM on our radar heading into the new week.

Source: OptionsAnalytix

With earnings now fading in the distance, implied volatility is returning to lower levels. This has me thinking a bull call spread is worth a shot.

Buy the Nov $150/$160 bull call spread for $4.15. The risk is limited to $4.15, and the reward is limited to $4.85.

As of this writing, Tyler Craig held bullish AAPL options positions. Want more education on how to trade? Check out his trading blog, Tales of a Technician.


Article printed from InvestorPlace Media, https://investorplace.com/2018/09/3-big-cap-tech-stocks-to-buy/.

©2024 InvestorPlace Media, LLC