Has the market bottomed? Does that even matter? To me it looks like, regardless of whether we have hit a bottom, it is an opportune time to trade stocks with some certainty. And right now, there are three Dow Jones stocks investors can buy, sell and prepare with for big profits.
Is September’s correction over? I’ve posed the question in recent days after the Nasdaq Composite signaled a “stealth” bullish follow-through day on the back of solid technical gains in large-cap tech stocks such as Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) and Tesla (NASDAQ:TSLA). The index was demonstrating its ability to lead a new market rally.
But the enthusiasm did not extend into other sectors. Other major averages such as the S&P 500 and Dow Jones Industrial Average were doing their own thing. That changed Monday when the whole group posted solid percentage gains to confirm the start of a new bullish cycle. As I’ve also written at InvestorPlace, I may be alone in that optimism.
According to the fact checkers and analysts which popularized the FTD, volume in the indices on each of those event days wasn’t up to snuff. My own view, given the secondary indicators of increasingly fragmented activity inside dark pools and the less-than-transparent markets, is that we should be more flexible with the signal — at least if the price and timing of the FTD hold true.
Regardless, if you believe the markets, in one form or another, will always offer imperfect information, it’s time to simply trust these Dow Jones stocks. They are offering quality trades in a market that is simply ambiguous.
Dow Jones Stocks : Boeing (BA)
The first of our Dow Jones stocks to trade is Boeing. Admittedly, I may be alone in casting my vote for the aircraft manufacturer. Between public — and more importantly, fatal — safety missteps and the impact of Covid-19, BA shares are incredibly out of favor. But the chart is telling us emphatically that it has had enough.
Shares are actually finding a bid today and are up a couple percent on plant consolidation news.
The price action is reinforcing a bullish weekly chart hammer pattern, which successfully challenged the 62% retracement level tied to Boeing’s March bottom. Along with a well-positioned stochastics crossover signal, BA is ready to take flight.
For a defined and reduced risk position, the Boeing stock December $185/$200 call spread for up to $4 looks attractive.
The next of our Dow Jones stocks to trade is 3M. Shares of the industrial conglomerate have continued to demonstrate weakness in 2020 despite being well-positioned for Covid-19. One way it benefits from the pandemic is through its personal protective equipment like the sought-after N95 respirator.
The combination of being in the right space at the right time and failure to capitalize on the opportunity begs the question, if not today, then when?
Better yet, shares are ready for bears to take charge and profit.
Technically, there is just so much wrong. Shares failed to clear overhead trendline resistance and are breaking beneath a key uptrend. Together with bearish stochastics confirmation, a short in this Dow Jones stock makes perfect sense.
To breathe easily, I would advise using the December $150/$140 put spread for up to $2.25 for a stronger risk-adjusted solution.
Dow Jones Stocks: Procter & Gamble (PG)
The last of today’s Dow stocks to trade is Procter & Gamble. The consumer non-durables outfit is another beneficiary of the coronavirus. Here though, the company has capitalized on today’s socially distanced normal.
Currently, I’m not a buyer or seller of shares or for that matter, an options position, which leans long or short deltas. The stock, however, is worth monitoring for a nearby trade to take hold. Technically, shares of PG are coiled in a narrow base that’s formed over the last several weeks after striking all-time highs. It’s the type of pattern to exploit with an open mind as either a bull or bear.
Should a breakout of pattern resistance trigger with the backing of a bullish stochastics crossover, this Dow Jones stock would be well-positioned as a long opportunity. Conversely, if less healthy conditions await shares in the days ahead, a good start for a bearish trade would be if PG breaks price support with stochastics trending bearishly lower out of overbought territory.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.