Last week’s notching of a new record by the S&P 500 had bulls partying just in time for the holiday. And with the trends pointing higher across all major indexes, I see little reason why the profits won’t continue. To celebrate, I’ve scanned the market for potential breakout stocks to buy.
Today’s candidates all boast several positives on the price front. First, buyers control their short-term trends confirming the path of least resistance is higher. Second, they’re all approaching key resistance zones, which provides a clear entry point for new trades. Finally, they call the technology sector home. And it has been one of the best performing areas in recent weeks.
With that in mind, here are three breakout stocks to buy.
Remember when the tech titans crumbled amid fears of government oversight and increased scrutiny? Since that outlier session on June 3, they’ve all powered back to their prior peaks. Some, like Facebook (NASDAQ:FB), are now poised to breakout to new 52-week highs.
This year’s ascent has been strong enough to turn the 200-day moving average, which had been falling, higher. It joins the rising 50-day and 20-day moving averages to confirm buyers are dominating across all time frames. The critical level to watch is $198. A pop above that will send FB stock back into the price void created by last July’s earnings–induced mega-plunge.
It’s eventual filling would return Facebook shares to $218.
To capitalize on further upside, buy the Sep $200/$215 bull call spread for $5.40.
What began as a vicious “V”-shaped recovery has morphed into a more sustainable, if gentle, rise for Amazon (NASDAQ:AMZN). Spectators waiting for the king of online retail to return to its prior highs are taking note. The early May high of $1,964 sits a stone’s throw away. Its eventual eclipse could bring buyers to the yard and propel AMZN stock back to last year’s highs of $2,050.
The 20-day and 50-day moving averages are both trending higher and could provide support during any type of pullback that materializes over the coming days.
AMZN bulls have two choices. Deploy trades now in anticipation of the imminent breakout, or wait for a close over the $1,964 high and then pull the trigger. Either way, bull call spreads will capitalize on the low implied volatility level that suggests options are cheap.
Buy the Sep $1,950/$2,000 bull call spread for around $23.
Compared to last year’s excitement, Square (NYSE:SQ) has been downright dull for 2019. The bulk of its price action has been stuck in a trading range. The crisscrossing moving averages confirm the neutral stance, but with buyers recently wresting control of the short-term trend, more upside could be in the cards.
The resistance level that caught my eye and served as the reason for Square stock’s inclusion in today’s gallery is $74.50. This ceiling has halted the past three advances, and its eventual failure will serve as a strong bullish signal. The next resistance zone of $80 is a logical target.
With implied volatility sitting at the 12th percentile of its one-year range, SQ stock options are cheap right now. That suggests long calls or call spreads are attractive. Consider buying the Sep $75/$80 bull call for around $2.
At the time 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.