Head waiter, Jerome Powell, just served investors some profits on a silver platter yesterday. The Federal Reserve’s struck the perfect dovish tone for those who wanted to hear it — and everyone wanted to hear it. With risk assets now boasting the Fed’s backing, it’s time to start looking for stocks to buy.
Ahead of the FOMC meeting, the S&P 500 entered a pausing pattern that allowed many an overbought stock to digest the substantial gains scored earlier in the month and establish attractive bases to break out from. Also, many beaten-down stocks were able to finish carving out bottoming patterns.
Many of these reversal formations were completed or confirmed during the buying binge that followed the Fed meeting. Others had a positive earnings announcement serve as the upside catalyst.
I’ve analyzed many of the market’s largest gainers for the month and discovered three with big bottoming patterns that suggest these are turning into stocks to buy.
Stocks to Buy as They Bottom: Apple (AAPL)
If you were looking for an all-clear signal before taking a bite out of Apple (NASDAQ:AAPL), this week’s earnings release was it. As a self-professed charting addict and price worshipper, I care less about what the company said and more about how the market reacted.
And, well, yesterday’s response to the earnings numbers was bullish. After an early-morning test lower, Apple rallied back to close near the high of the day. The profit-fest continued this morning for a total gain of 7.5%. With AAPL stock now forming a higher high and sitting north of the 50-day moving average for the first time since last October, the trend has officially turned.
Sell the rip is dead. Buy the dip is back. Consider wading back into AAPL stock and adding into weakness.
Stocks to Buy as They Bottom: Advanced Micro Devices (AMD)
Traders of Advanced Micro Devices (NYSE:AMD) certainly are an energetic bunch. Yesterday’s 20% rocket higher and today’s 9% follow through prove that all these volatility lovers were waiting for was a sign that the coast was clear. And, well, with this week’s quarterly report, they got it.
The rally officially completes the three-month consolidation pattern that AMD was locked in. Technicians have a saying: “the longer the base, the higher in space.” When stocks finally break above multi-month bases, they do so with a lot of fuel to power them higher. We’re seeing just such an outcome with AMD right now.
With resistance at $22 thoroughly smashed, this new trend should continue for a while.
Given AMD stock’s cheap price tag and high volatility, you might consider selling covered calls to complement a stock purchase.
Stocks to Buy as They Bottom: Whirlpool (WHR)
If there’s an outlier in today’s trio, it’s our next pick: Whirlpool (NYSE:WHR). Though it’s in a different sector than AMD and AAPL, WHR still has a bottom worth mentioning. Over the past two years, Whirpool quietly fell 50% amid widespread weakness in housing stocks.
But if its reaction to this week’s earnings is any indication, the worst may already be priced-in. Tuesday’s monster candlestick is one of the most impressive I’ve seen in ages. Huge volume accompanied the 17.6% rally off the session lows showing massive buyers piled in.
The climb pushed the stock above key resistance at $128.50 and completed a large double bottom pattern which could spell the stock’s low for months to come. And that makes this a potential stock to invest in.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently released Bear Market Survival Guide to learn how to protect your portfolio against a market crash.
