Stocks are starting the week with a bang. Fueled by positive developments from ongoing bilateral trade talks between the U.S. and China, the market gapped higher this morning. Should the optimism hold, we may be in for an intense week of gains. To prepare yourself, we’re offering up three of the best trades for the week.
This year’s relentless rise has created no small number of big winners. Uptrends litter the landscape making the game of discovering bullish opportunities a cinch. The trick is to find low-risk entries and avoid the temptation to chase stocks that are already extended from established support zones.
Active traders preach the importance of deploying positions when the risk is low and the potential reward is high. That way, even if your win rate sinks below 50% you still stand a chance for profitability.
My weekend surveying revealed these three companies are among the best trades right now.
Facebook (FB)
Facebook (NASDAQ:FB) tops our list with a gorgeous pullback pattern. Ever since the social media king pole-vaulted on earnings last month, I’ve been waiting for a low-risk setup to provide a better entry point. Because of the magnitude of the up-gap, I was leery of chasing.
Thus far, my patience has paid. The three-week retracement that has since formed is creating a clean buy the dip opportunity. The rising 20-day moving average came into play last week, and buyers emerged to defend their newfound turf. With this morning’s jump, FB stock is starting its next up-leg. And that makes now an appropriate time to pull the trigger for bullish trades.
With low implied volatility, buying cheap options is the way to go. If you’re willing to bet FB climbs toward $180 in the weeks to come, then buy the May $160/$180 bull call spread for $8.50.
Apple (AAPL)
Like Facebook, the recent earnings report in Apple (NASDAQ:AAPL) sparked a new uptrend and cemented its bottom. Since then, AAPL stock has toed the bullish line with nary a misstep. The two-week pause that settled on the stock after its post-earnings run allowed overbought pressures to ease and established an easy base to build a breakout trade from.
Friday’s ramp and today’s follow-through is indicating the consolidation period is finished and the uptrend is ready to run again. And that makes AAPL one of the best stocks to buy right now. Like its predecessor, AAPL boasts cheap options with an implied volatility rank of 21%.
To capitalize, I suggest buying the May $175/$185 bull call spread for $4.25.
Visa (V)
Visa (NYSE:V) rounds out today’s trio with an easy to spot breakout pattern. Ever since October’s breakdown, resistance at $145 has proven impenetrable. Multiple attempts to dethrone its dominance were rejected in short order.
Until Friday, that is.
With broad market strength at its back, buyers finally felled the ceiling. Although the breakout wasn’t as epic as others, it was a resistance breach regardless. And with the 20-day, 50-day and 200-day moving averages all rising loyally beneath, I think Visa is cleared for a re-test of last year’s highs at $151.56.
Since market uncertainty has been thoroughly squashed, V stock carries ultra-low implied volatility as well. The rank is 7%, making option buys the easy choice here. Buy the April $145/$150 bull call spread for $2.75.
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 defend your portfolio against market volatility.
