Fear came to Wall Street this fall. From tariffs and trade wars to rising interest rates and a slowing economy, jittery investors have had a spate of negative news to worry about. Tech stocks bore the brunt of the damage with high growth, momentum names falling into bear markets across the board.
But if yesterday’s rousing rebound is any indication, these FANG stocks aren’t going down without a fight. The culprit for Wednesday’s snap-back was two-fold.
First, Federal Reserve chair Jerome Powell struck a dovish tone during yesterday’s speech suggesting the current level of interest rates is nearing neutral. The commentary caused the Street to downshift the number of rate hikes expected next year. And, well, everybody jumped back into the equity pool sending stocks flying.
Second, Salesforce (NYSE:CRM) delivered blowout earnings, which quelled fears that economic weakness is hampering corporate profits in tech stocks.
If yesterday’s positive undertones persist, now may be a good time to shop for the best tech stocks to buy.
Here are three for your consideration.
Adobe (ADBE)
Tech stocks like Adobe (NASDAQ:ADBE) came roaring back yesterday. What I find particularly impressive is how Wednesday’s surge negated the massive support break from earlier in the month. The breakout has officially become a fakeout.
With short-sellers now thoroughly scorched, ADBE stock could continue powering higher. In the short run, some backing and filling is likely, however. Adobe is up some 21% in the past six trading sessions and testing its falling 50-day moving average.
Unless it falls back below $231, buyers deserve the benefit of the doubt.
ADBE is slated to report earnings on Dec. 13.
Advanced Micro Devices (AMD)
Once-loved semiconductor stocks quickly became loathed this fall. Advanced Micro Devices (NASDAQ:AMD) shares were demolished to the tune of 53% before finally finding a bottom.
The price action over the past six weeks has been constructive. Both tests of the 200-day moving average were defended vigorously by bulls. And we now have a healthy base to launch from if AMD wants to reclaim its former glory. Resistance near $22 is the level to watch. A break above that will turn the daily trend higher.
The cheap price tag and high implied volatility make AMD stock a prime naked put candidate. If you’re willing to bet it remains firm, then sell the Jan $17 put for 58 cents.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) has exhibited relative strength throughout the turmoil, and it has held up much better than the FANG gang. Yesterday’s rally in MSFT stock places an exclamation point on its recent muscle-flexing by sending the stock back above its 50-day moving average amid heavy volume.
At $111, MSFT remains a mere pebble toss from record highs. Like Adobe, Microsoft has risen considerably over the last six trading sessions (12%) so a pause or pullback could be in order before it revisits its prior peak of $116.18.
Nonetheless, if you’re seeking one of the best stocks to buy, MSFT deserves your attention.
Consider buying the Jan $110/$115 bull call spread for around $2.10.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want insightful education on how to trade? Check out his trading blog, Tales of a Technician.
