It could be another December to remember rather than a Santa Claus rally. But beyond 2019 and looking into 2020, Dow stocks AT&T (NYSE:T), Caterpillar (NYSE:CAT) and UnitedHealth (NYSE:UNH) are ready to deliver more secure capital gains and the safety of income all in one investment. Let me explain.
Wall Street is breathing easier today. Back-to-back sessions of elevated tariff threats by the U.S. aimed at friends and foes across both ponds saw the Dow Jones Industrials tumble nearly 2% within a fresh chapter of the risk-off playbook to begin the week. And many Dow stocks like Apple (NASDAQ:AAPL) took it even harder on the chin. Meanwhile, Wednesday’s early headlines out of the NATO summit have investors quickly trying to turn the page.
The broader averages opened firmly higher today on reports Beijing and Washington are still working on the first phase of a trade deal despite POTUS’ prior bullying ways. That has helped the Dow Jones reach a quick gain of 0.75%, while making yesterday’s news a fast money buying opportunity. But for investors with longer horizons, appreciative headline risks of all types are par for the course under today’s leadership. More importantly, it’s time to recognize “we gonna be alright.” And capitalizing on that optimism is made easy in in Dow stocks like T, CAT and UNH.
Let’s take a deeper look at each.
Dow Stocks to Buy: AT&T (T)
AT&T is the first of our Dow stocks to buy. The blue-chip stock currently offers investors an attractive income stream of 5.43%. Moreover, relative strength and capital gains into 2020 look good after a massive cup breakout and successful test of prior resistance.
T Stock Strategy: This Dow stock can be bought today. Shares have just confirmed a weekly reversal low within the high-handle consolidation. For containing risk I’d recommend an 8% stop-loss rather than the pattern low. This strategy only exits on a decided failure of uptrend support. Given increased volatility in the market and a still-out-of-position stochastics, this allowance makes more sense than using the low tied to T stock’s successful test.
Caterpillar is next on my list of Dow stocks to buy now. Over nearly two years, CAT stock has developed into double-bottom consolidation on its monthly chart. With shares breaching the pattern’s mid-pivot last month the odds for an eventual breakout to all-time-highs in 2020 are increased. There’s also a dividend of nearly 3% to sweeten the deal.
CAT Stock Strategy: For this Dow stock I’d recommend waiting for a move though $145. This entry clears the pattern’s mid-pivot and November’s closing price. The strategy allows for a bit of extra confirmation without giving away too much. To keep risk manageable in this “second-attempt” entry, a stop-loss marginally beneath November’s low set at $137 looks smart off and on the price chart.
UnitedHealth is the next Dow stock to buy. This blue-chip’s dividend isn’t nearly as attractive as the payouts offered in T and CAT, but there’s no denying UNH stock’s very healthy looking monthly chart.
UNH stock is currently trading inside a year-long cup or “W-shaped” base. The bullish pattern looks even stronger due to a confirmed test of Fibonacci support from 2015 and price action that’s backed by a very supportive-looking stochastics setup.
UnitedHealth Stock Strategy: With shares currently less than 5% above July’s mid-pivot of $267.43, this Dow stock can be bought today. For long entries, I’d recommend an 8% stop-loss. That should provide enough leeway if a constructive-looking handle-like pullback appears. But only issue last rights on the position if conditions turn sicklier.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.