We just had Inauguration Day — time to celebrate, right? Politics aside, investors should be agreeable the market is certainly still headed in the right direction, whether their market capitalization is large or small. And when it comes to the price charts of the following three large-cap stocks, bulls won’t be biding their time much longer. Let me explain.
Constant fighting between Republicans and Democrats, Covid-19’s detrimental impact on families and businesses alike, trade wars, historically nosebleed price multiples … nothing, it seems, has been able to stand in the way of progress for Wall Street. And if we’re to look at the likes of the large-cap S&P 500 or it’s tech-heavy sibling the Nasdaq Composite, that’s certainly true.
In 2020 and despite everything, large-cap stocks stormed higher. For its part, the broad-based S&P 500 gained an above-average 16% while hitting record highs. At the same time the Nasdaq led the charge with an astonishing return of 43%.
Thank the Federal Reserve’s hand in the markets, in part, for the dazzling and record-breaking rally over the past 10 months. And investors would be wrong to ignore its impact. And of course there’s today’s essential or consequential technologies that have helped us to better navigate the coronavirus’ daily challenges.
Lastly and importantly, it would be hard to overlook less-essential but obviously well-loved vehicles of service to Wall and Main Street. I’m talking about Tesla (NASDAQ:TSLA) of course, whose market cap stands at $800 billion after rocketing nearly 700% in 2020! But can the fun for large-cap stocks continue?
To be fair (or prepared at least), an eventual day of reckoning and more durable adverse conditions is bound to happen. But as we move through January and welcome in the new Biden administration, market conditions suggest going long three large-cap stocks that have been “bid ‘en” their time in healthy and constructive ways as the right course of action for investors.
Large-Cap Stocks to Buy: Apple (AAPL)
Source: Charts by TradingView
The first of our large-cap stocks to buy are shares of Apple, the world’s largest publicly traded company. In recent weeks, the buzz surrounding the tech giant is an EV Apple Car. Watch out Tesla? Maybe, but investors banking on a successful rollout will have to wait years. In our eyes, it’s irrelevant background noise in the near-term.
What should be pressing investors buttons — the buy button at least — is AAPL stock’s price chart. As the provided weekly view reveals, the last four months of 2020 were spent establishing a bullish “W” corrective base. Now and after a modest breakout in late December, a constructive-looking “high-handle” pattern has formed.
With today’s price action confirming a weekly pivot low for the handle and Apple’s monthly stochastics just crossing over in neutral territory, it’s our belief there’s enough price evidence to make this large-cap stock a buy today.
Favored Strategy: March $140/$155 Bull Call Spread
Microsoft (MSFT)
Source: Charts by TradingView
Microsoft, the market’s second-largest constituent, is the next of our large-cap stocks to buy. As with AAPL, MSFT shares have been biding their time on the price chart while its cloud and Windows businesses, as well as Surface and Xbox devices, continue to thrive overall.
The pause on this large-cap stock’s price chart and healthy business environment should serve as a solid platform for much higher share prices in 2021. Further, those odds are improved as MSFT’s technical backing and filling has resulted in a bullish symmetrical triangle. And backed by a cooperative oversold stochastics signal on the monthly timeframe, the upside looks even more promising right now!
Favored Strategy: Modified Collar (Feb $215/$200) / (March $250 Call)
Amazon (AMZN)
Source: Charts by TradingView
Amazon is the last of our large-cap stocks to buy. It’s a close third behind MSFT in market cap. Shares are valued at $1.64 trillion with just several billion separating the two companies. To be certain, consumers of all kinds don’t need me to enlighten them on how essential Amazon has become. And unlike Covid-19, I think we can all agree that success isn’t going away.
To be somewhat bipartisan, now and more than ever, there’s the threat of antitrust legislation and breaking up a beast like Amazon. But governments aren’t typically known for their speedy action. Also, if regulators are ever to impose their will this large-cap stock, that’s not necessarily bad for shareholders. The sum of the parts can be much greater than the whole, right?
Politics aside, AMZN stock looks poised to deliver the goods for investors buying shares today.
Right now a monthly symmetrical triangle is gearing up for a breakout to new highs. As a healthy second-stage basing pattern and one supported by a fresh stochastics buy signal, I’d conservatively estimate a measured move towards $5,000 over the next 12 to 18 months is possible. And bottom line, that should mean plenty of bullish opportunities along the way for this large-cap stock’s investors.
Favored Strategy: June $3750/$4000 Bull Call Spread
On the date of publication, Chris Tyler does not hold, directly or indirectly, positions in any 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.
