With over a quarter of the S&P 500 releasing earnings this week, we’ve officially reached the heart of earnings season. And while some traders are comfortable swinging bets into the elevated volatility of these quarterly events, others desire to sidestep the drama altogether. For this latter group, or anyone seeking sweet looking setups for the new week, these three stocks to buy will be of interest.
I’ve finished my weekend scanning and discovered three powerful stocks eyeing new highs. They all boast powerful up-trends and are one resistance zone away from busting to new 2019 highs.
And, perhaps, most importantly, none of them report earnings over the next month, leaving plenty of time to play before the volatility monster comes to town.
Check out these three breakout stocks to buy for the week.
Best Buy (BBY)
Nasty price action plagued Best Buy (NYSE:BBY) heading into and directly following last quarter’s earnings announcement. But since finding a bottom in early June, BBY stock has put together quite the consistent little uptrend.
The ascent has been strong enough to turn the 20-day moving average higher, and the 50-day has flattened and appears poised to start treading higher. Each pullback materializing in the stock since last month’s low has been shallow, short-lived and resulted in powerful upside breakouts.
Last week’s three-day slide proved no different and ended with a bullish reversal on Friday.
Watch for a break out of the $76 resistance zone, then pull the trigger on bullish trades in BBY stock. I like the Sep $75/$80 bull call spread, which currently costs $2.
Short of one hiccup, this year’s price action for Target (NYSE:TGT) has been quite bullish. TGT stock is now a stone’s throw from reaching all-time highs. The ceiling near $90 is all that stands from the retailer and clear blue skies. And I think bull trades are worth a shot once resistance is finally felled.
The past six weeks of consolidation have created a stable base to launch from. Friday’s test of the ceiling failed, but it’s only a matter of time before buyers finally succeed in their breakout bid.
Watch for a breakout above $89.50, then deploy bull trades. Implied volatility sits at the 12th percentile of its one-year range, so options are cheap right now. I’m mirroring the BBY suggestion with a bull call spread idea. Buy the Sep $90/$95 call vertical for around $1.60 for a cheap upside bet.
Home Depot (HD)
Home Depot (NYSE:HD) rounds out today’s trio of key stocks to buy now. And while the pattern is more of a retracement than a breakout, it’s too pretty to pass up. The past two months have seen a powerful uptrend emerge, delivering multiple breakout and pullback buy opportunities along the way. Last week’s four-day retreat is delivering a perfect buy-the-dip opportunity right at the rising 20-day moving average.
Also, we’re testing the old resistance zone near $213, which could morph into support. Last week’s breakout did take HD stock to a new all-time high, so buyers have proved their willingness to pay record-setting prices. If you’re willing to bet on trend continuation, then deploying bullish trades here is worth a shot. Wait for a break above Friday’s high at $215.23, then enter.
With an implied volatility rank of 10%, options can be bought on the cheap. We’re continuing our call spread theme with a suggestion to buy the Sep $215/$225 bull call for around $3.70.
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.