Trends come and go. And sometimes they persist longer than we think possible. To say the least, Wall Street can be tough to figure out, which makes it challenging to find the best stocks to buy.
As much, let’s explore the price charts of three stocks bridging “what’s hot and what’s not” with three tech Dow Jones stocks to buy whose charts indicate that it’s time to invest accordingly, but also more smartly.
It’s been almost exactly two months since a bearishly disruptive shift out of extremely pricey and often incalculable high multiple stocks. Since Feb. 16 when the large-cap, tech-heavy Invesco QQQ Trust (NASDAQ:QQQ) topped in front of a decent size 12% correction into early March, shares have just now come up for air this week sporting fractional new all-time-highs.
The action has proven consistently more trying for last year’s top-performing, tech and growth-centric Ark Innovation ETF (NYSEARCA:ARKK).
Tesla (NASDAQ:TSLA), Square (NYSE:SQ), Teladoc (NYSE:TDOC), Roku (NASDAQ:ROKU) and Zillow Group (NASDAQ:Z) are a who’s who of well-known but richly priced companies. The group also comprises roughly 35% of ARKK’s weighting.
ARKK plummeted 33.5% from its peak valuation of $159.70 to March’s absolute rock bottom of $106.25. And today, the ETF remains roughly 20% beneath its highs and scratching higher by a fairly meaningless 2.5% given the product’s heady volatility. Meanwhile, the Dow Jones Industrial Average is up 11% for the year.
Warren Buffett’s famous advice to be “fearful when others are greedy, and greedy when other are fearful” serves that purpose. All told, the best advice is simply let the charts of these Dow Jones stocks do the talking and combine the best of technology, value and growth into nearby and actionable trades happening today.
Dow Jones Stocks to Buy: Apple (AAPL)
The first of our Dow Jones stocks to buy are shares of Apple. The tech giant and world’s largest company has relatively and absolutely underperformed the bellwether index in 2021.AAPL stock is essentially flat on the year.
Technically, I’m expecting a more spirited performance in the weeks and months ahead from Apple shares.
As the illustrated monthly chart reveals, AAPL has confirmed April’s higher-low doji candlestick signal. Highlighted in yellow, that occurred this past week as the tech stock traded above the pattern high of $128.72. With the formation also confirming a healthier, slower moving uptrend and stochastics well inside neutral territory, this Dow Jones stock is one to own today.
I recently discussed a collar combination for positioning in AAPL stock. Prices are modestly less attractive as shares have traded higher. However, with the extra price confirmation and Greek neutral structure of this spread, the May $145 call / $120 put collar remains a favored hedged vehicle for owning this Dow Jones stock.
Cisco Systems (CSCO)
Cisco Systems is the next of our Dow Jones stocks to buy. You won’t find CSCO shareholders complaining about absolute or relative weakness this year. So far in 2021 the diversified networking play is up 15%.
Longer term, what it’s like to be a CSCO shareholder is another story entirely. Today and priced near $51.50, shares of Cisco remain about 19% below their dot-com all-time-high of $60.89. And the Dow? Let’s just say that obstacle was passed once and for all more than eight years and roughly 135% ago.
Looking ahead, conditions in CSCO are shaping up favorably for a period of stronger and market-beating returns. Technically, this Dow Jones stock has just entered the third week of a well-positioned handle consolidation. At this point shares could simply stage a pattern breakout. But a poorly positioned stochastics hints at a handle which could trade towards the larger W base’s mid-pivot and 62% level.
For the time being and earnings just over a month out, I’d monitor this Dow Jones stock for a pivot low within the handle support zone and develop a hedged collar buy decision from there.
The last of our Dow Jones stocks to buy are shares of Salesforce. One of the Dow’s most recently added constituents, if timing is everything, those in charge of the reshuffling added an unnecessary weight on the market barometer.
Since Aug. 31, when CRM stock debuted in the Dow, shares have formed a series of lower-highs and lows to take the cloud business play into a well-defined bear market. At its weakest this past month, the damage amounted to a corrective decline of 29%.
The good news? All stocks correct. The fact is even the best stocks and those with growth prospects like CRM’s, will invariably go through cycles where losses of up to 30% are par for the course. That’s not all either. Today and with a bullish monthly hammer low supported by the stock’s 50% Covid retracement level confirmed and stochastics on the cusp of a supportive crossover, things are finally looking up this Dow(n) Jones stock.
Here, I’d go with a June $230/$250 collar combination. This slightly unorthodox strike positioning takes advantage of a new anticipated bullish phase in shares. At the same time, this structure avoids larger losses if CRM stock continues to fail living up to its blue-chip legacy.
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.