A new quarter is upon us and bulls are already expressing their dominance. Friday’s rally to end the first quarter on a high note is persisting Monday, as stocks gap almost 1% higher. The strength is particularly impressive in the technology sector, which offers many of the best stocks to buy for this week.
Last Monday’s gallery highlighted three top buy-the-dip candidates in the tech sector. Today, we’re going back to the well, but focusing on breakout setups instead.
While many tech stocks created pullback patterns over the past few weeks, some have held firm near resistance. The sideways consolidation has allowed overbought pressures to ease and moving averages to catch up. With bases now formed, today’s selections could see nice upside follow through.
Here are three breakout tech stocks to buy:
3 Tech Stocks to Buy: Cisco (CSCO)
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Since jumping to record highs after February’s earnings release, Cisco (NASDAQ:CSCO) shares have been on a mission to the moon. With little by way of overhead resistance, the San Jose, California-based company’s ascent has been relentless, bringing its year-to-date gains to 25%.
The torrid pace is likely unsustainable, but no sense in fighting the extremely bullish trend. What caught my eye over the weekend was the clear two-week base that is on the verge of breaking. Friday’s hammer candle ushered CSCO stock to the top end of the range.
And before I could fire off today’s message, CSCO breached resistance. With implied volatility in the tank, long calls or call spreads are the way to go.
Buy the June $55 calls for $1.75.
Nvidia (NVDA)
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The 2019 recovery in Nvidia turned both the short-term and intermediate-term trends higher. Since carving out another higher swing high, NVDA stock formed a high base pattern. Volume signals during the pause remained bullish with few signs of distribution compared to the many accumulation days that cropped up during the previous rally.
This sets up an interesting breakout opportunity over $185 resistance that could take the stock to $200 and result in the outsized November gap finally filling.
The early morning gap is fading, so wait for NVDA to reverse higher and climb above $185 before pulling the trigger on bullish trades.
Consider buying the June $180/$200 bull call spread for less than $10.
Shopify (SHOP)
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Shopify’s trend has mirrored that of Cisco’s. But with a much higher beta, the rise in SHOP stock has been much more dramatic. Since eclipsing $200, the stock has been consolidating to digest recent gains. With the 20-day moving average now caught up, the time for a breakout is nigh.
This morning’s rally was rejected at the $210 ceiling, so we’ve yet to see a successful breakthrough. Either set a price alert or trigger for bullish plays above this level. The tech sector seems to be pausing a bit as other areas pick up the slack so SHOP may need a few days before powering through the high.
Consider the May $200/$220 bull call spread to play the pattern.
As of this writing, Tyler Craig didn’t hold positions 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.
