Headlines are multiplying about the market’s first three-day pullback of 2019. This week’s rout marks the first real victory for sellers in 2019, and, more importantly, the year’s first buy-the-dip opportunity. Today we’ll look at three of the best stocks to buy while the Street runs scared.
Retracements, like those seen this week, are what sustainable uptrends are made of. Without them, uptrends become parabolic and dangerous. Lacking support, they are vulnerable to sharp descents when the tide turns. Smart traders should embrace the bout of profit-taking and the new support zones that will soon be created.
While the sell-fest may persist for a few days yet, the health of the market this year with its accompanying expansion in breadth and sentiment demands optimism. View this dip as a buying opportunity.
I’ve scoured the market for the strongest market leaders and discovered three which are now providing attractive entry points.
Boeing (BA)
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Large-cap lovers recaptured their affection for Boeing (NYSE:BA) when the aerospace juggernaut finally broke out of its year-long range last month. A rosy earnings announcement sparked the surge and the follow-through seen since has been breathtaking.
This week’s market weakness finally ushered in a well-deserved bout of profit-taking and BA stock is working on its fourth straight down day this morning. Boeing shares are testing the rising 20-day moving average which may provide support. Even if it doesn’t, other potential floors loom close, so bet against buyers at your peril here.
If you’re looking for a high probability bet, then sell the April $400/$395 bull put spreads for $1.15.
Palo Alto Networks (PANW)
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Palo Alto Networks (NYSE:PANW) boasts an uptrend that may even be prettier than Boeing’s. And that’s saying something. Even though the PANW stock was up a mouth-watering 30% ahead of last month’s earnings release, it still gapped 10% higher the next morning.
The large gap ended with a-sell-the-news reaction that has since ushered the stock back to its gap area. Multiple support levels reside in this area including a now-filled gap, old resistance and the rising 20-day moving average. Yesterday’s doji candle signaled a potential upside reversal in the offing, and today’s rally is confirming the turnaround.
With implied volatility at a lowly 17th percentile, long option plays are the way to go. Buy the April $240/$250 bull call spread for $4.
Intuit (INTU)
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This year’s price action in Intuit (NASDAQ:INTU) has mirrored that of PANW. And that makes it qualify as one of the best stocks to buy right now. It experienced a sharp two-month rise that exploded to new all-time highs following a robust earnings release. Since then INTU has formed a high base pattern.
The sideways pause has allowed overbought pressures to ease and the 20-day moving average to play catch-up. With the four-day pullback, INTU stock is now at the lower end of its tight range. Traders have two potential entry points — buying above today’s high or waiting for a breakout over $252.
Either way, bull call spreads are my weapon of choice here. Buy the April $250/$260 bull call for $3.50.
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.
