There’s no denying bears are on the prowl. The price charts of everything from the S&P 500 to the Nasdaq are littered with evidence of their recent emergence. But not all equities have suffered equally. A select few have hidden well and continue to thrive. If you’ve come seeking stocks to buy that are defying the bears, then I have three beautiful choices.
If you know what to look for, strong stocks aren’t hard to find. One simple method involves sorting your watchlist by percentage change. The biggest gainers sit on top in plain sight. Take Tuesday, for instance. The S&P 500 ended the day up 1%. By contrast, today’s trio of bear-beating stocks was up 5%, 7%, and 10%, respectively.
Of course, one day of outperformance doesn’t demand an immediate buy. The burst of strength has to be backed by a constructive price chart. We’re talking about an uptrend, rising moving averages, bullish volume patterns and the like.
Here are three stocks to buy that fit the bill.
Let’s take a closer look at the charts.
3 Stocks to Buy that are Defying Bears: Zoom (ZM)
Zoom is ripping another 5% today to a record high. It’s completely ignoring overbought pressures, proving buyers are willing to pay any price. The stampede is jamming volume to the moon. Wednesday is well on its way to becoming the fourth accumulation day in a row.
As you’d expect with a stock at all-time highs, the technicals are pristine. All major moving averages are rising in a bullish fashion, and momentum readings are through the roof.
While I’m an unabashed advocate of Zoom as a buy candidate, I must admit some hesitation to piling in here. The higher it goes, the worse the reward-to-risk ratio becomes. From the Sept. 8 pivot low, we’ve gained nearly $200, or 53%. It’s impossible to continue that rate of ascent.
I prefer to wait for a pause or a pullback before pouncing. But make no mistake — ZM is a top stock to buy into any weakness.
Pinterest has been a bastion of strength during the recent market meltdown, and is the second pick for today’s stocks to buy. While the rest of the market slid lower, PINS stock was holding firm just beneath resistance. And then, on Tuesday, it finally broke out with an impressive 10% gain. It’s up another 3% this morning.
Like Zoom, PINS is now basking in record territory. There’s not a resistance zone in sight, and no reason why any continuation pattern that crops up over the coming weeks shouldn’t be viewed as significant buying opportunities. Though not as overbought as ZOOM, Pinterest has already traveled pretty far from its breakout point.
It’s probably worth waiting for the next pullback or consolidation pattern. If you have to purchase here, I prefer scaling-in. By entering a partial position only, you have the flexibility of adding more exposure into weakness. Alternatively, you could sell puts to get paid for your willingness to acquire shares back at the breakout point.
The Trade: Sell the Oct $38 put for $1.20.
Twitter shares are taking flight this week. They’re up 8% so far today, and that comes after Tuesday’s 7% ramp. With the gains, TWTR stock is within striking distance of a new five-year high. Its uptrend is supported by rising moving averages across all time frames.
And then there are the volume patterns, which have been overwhelmingly bullish for the past two months. Accumulation days have returned in a big way, especially over the past two trading sessions.
Like its predecessors, Twitter is flashing overbought signals. While not bearish, the extremity of the rally does question the wisdom of new entries for short-term traders. Waiting for a pause or a retracement could be prudent. I’ll echo my PINS trade idea. If you’re entering now, scale in. Or sell puts to give yourself a wider range of profit.
The Trade: Sell the Oct $43 put for around $1.15.
On the date of publication, Tyler Craig did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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