Traders awoke to a sea of losses this morning. Profit-taking in the wake of Wednesday’s Fed meeting drove stocks lower overnight, creating a -2.4% gap in the S&P 500. Small-caps were even harder hit, tumbling 4%. But amidst the selling, a few companies took flight.
Spotting relative strength on a day like today is a cinch. Simply sort your watchlist by percentage change and voila! the leaders are on top. Today’s gallery spotlights my three favorite stocks to buy that are holding firm.
Sometimes these muscle flexers are the beneficiaries of good news, like an analyst upgrade. Other times, they sit in a sector or industry that institutions are rotating into. Take a look at today’s selections and see if you can identify any themes.
Let’s analyze the charts of each and identify how to profit.
3 Stocks to Buy that are Ignoring the Selloff: Peloton (PTON)
Peloton has capitalized on the stay-at-home trend. With gyms across the nation shuttered, demand for Peloton bikes and treadmills exploded. And investors have taken note, flooding into PTON stock and driving its share price up 172% from March 16 lows. That’s an epic three month run.
And yet, the stock doesn’t look worn out. Since vaulting higher on earnings last month, PTON has spent the past few weeks in consolidation mode above its rising 50-day and 20-day moving averages. The drift has allowed the stock to work through overbought pressures and build a beautiful breakout pattern.
With the stock popping 2.2% in early trading, it’s one of the biggest gainers in the session. A breakout over its $49.68 high will be a buying opportunity.
If you’re looking for an options trade, I like purchasing the July $50/$55 bull call spread for around $1.60.
The remaining two picks come from the software industry, which has been red-hot over the past quarter. Twilio exploded past $200 for the first time after releasing stellar earnings. Its recovery has even exceeded Peloton’s.
Since the March bottom of $68.06, TWLO stock is up nearly 200%. Like PTON, Twilio shares have spent the past few weeks digesting May’s monster gains. The pause is a welcome development and has created a much more palatable entry for those hesitant to rally-chase.
In trying to fine-tune the timing and avoid having to sit through choppiness after entry, I suggest waiting for an upside breakout. Wednesday’s high of $205 is the level to watch. Once TWLO takes it out, consider buying shares or deploying the July $210/$220 bull call spread.
Crowdstrike Holdings rounds out our trio of stocks to buy today with gains that exceed its predecessors. One of the recurring themes among today’s selections is powerful rallies seen after their most recent quarterly reports. And it isn’t like they were struggling ahead of the release.
They all ran hard into their earnings calls and still delivered good enough numbers to justify even more gains. That’s bullish price action, no matter how you spin it.
CRWD stock is up 206% over the past three months and is currently testing its all-time high. I like the sideways base that’s formed over the past week. It’s allowed the 20-day moving average to play catch-up and is setting up a better entry point.
It may need more time before blasting through the century mark, but when it does, bullish trades are a go. If you’re looking for a cheaper alternative to buying stock, try the July $100/$110 bull call spread.
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