The Fed Meeting is over and the market uptrend remains intact. Here’s the key takeaway: bulls should celebrate and traders have a green light for finding stocks to buy.
Wednesday’s decision to cut the Fed’s target rate by a quarter-point arrived as expected. While some may quibble over whether the Fed was clear enough with its guidance on future rate cuts, the market wasn’t upset by the tone at all. Yesterday’s late-day rally and this morning’s quiet open signal the uptrend is alive and well.
And it’s not just the S&P 500’s uptrend that is bolstering buyers’ resolve. It’s also the emergence of small-cap stocks as a market leader, and the powerful sector rotation into economically sensitive stocks like industrials.
There are also a bevy of beautiful breakout setups beckoning to profit-seekers. Here are three of the best stocks to buy right now.
The interminable trade war has cast a cloud over Chinese stocks. But the uncertainty is easing in companies like Alibaba (NYSE:BABA). BABA stock has seen improving price performance over the past two months and is a whisker away from staging a major breakout.
The series of higher pivot lows reveal increasing buying aggression. And the rising 20-day, 50-day, and 200-day moving averages confirm bulls control the trend across all time frames. Resistance at $180 is the clear level to watch. It’s halted over five rally attempts, but the time has come for its reign to end.
Implied volatility is cheap making long call spreads an attractive trade. Buy the Nov $185/$195 bull call spread for around $3.60.
A textbook symmetrical triangle pattern is set for completion this morning. Microsoft (NASDAQ:MSFT) is gapping higher on news of a $40 billion buyback plan and dividend increase.
The software sultan boosted the quarterly dividend over 10% from 46 cents to 51 cents. In the prior two fiscal years, MSFT has bought back $10.72 billion and $19.54 billion worth of shares.
Triangle patterns like that seen over the past two months in MSFT represent coiled springs with plenty of pent-up energy. Today’s breakout represents the release that should propel Microsoft higher moving forward.
Buy the Nov $140/$145 bull call spread for $2.50.
Applied Materials (AMAT)
Semiconductor stocks are reclaiming their former glory this month, creating compelling trading setups for consideration. Applied Materials (NASDAQ:AMAT) shares are flashing a cup-and-handle pattern that is attempting to breakout this morning. Its price trend is powerful across all time frames and volume patterns have been bullish for the past month.
Even if this morning’s breakout bid fails, I suspect any weakness will be short-lived. Because implied volatility is in the tank at the 5th percentile of its one-year range, long option plays are the way to go. Buy the Jan $52.50/$57.50 bull call spread for $1.95.
As of this writing, Tyler Craig held bullish positions in BABA and MSFT. Check out his recently released Bear Market Survival Guide to learn how to protect your portfolio from the next crash.