Battered bulls fearing for a continuation of last week’s selloff are breathing a sigh of relief this morning. Equity markets are buoyant, and risk appetite is returning. Notably, the sectors that were smacked hardest last week are rallying the most today. Small-caps are leading the charge on the index level, with the Russell 2000 Index up over 2% in early trading. Against this optimistic backdrop, we’re focusing on three bull ideas for this week’s top stock trades.
My weekend scanning was a way of looking under the hood to see just how widespread last week’s bearishness was. As it turns out, I still found plenty of good-looking stocks to buy.
The capital fleeing cyclical and value stocks found a new home in some healthcare and tech stocks. Rather than focus on a particular sector, I went where the charts led me.
Behold, three diverse picks for your consideration:
Let’s take a closer look at each and suggest an options trade to play.
Top Stock Trades: Bumble (BMBL)
One key takeaway from last week’s drama was this: value’s pain was growth’s gain. While falling interest rates took the wind out of the sails of financials and cyclicals, growth stocks took it as a sign to rally anew. Bumble might be my favorite of the bunch. And I wouldn’t have been caught dead saying that a month ago.
But the price action has changed.
After getting cut in half, selling pressure has dried up, and an uptrend has developed. Heading into this week, BMBL stock offered a high base pattern that is breaking out as I type. We’re also popping above the 50-day moving average for the first time since it became available.
The Trade: Buy the August $55/$60 bull call spread for $1.55.
The risk is $1.55, and the max reward is $3.45.
Dick’s Sporting Goods (DKS)
Dick’s Sporting Goods is on pace for a banner year. Despite a stock price that had already rocketed to the moon, its latest earnings numbers were still good enough to warrant a one-day gain of 16%. The stunning earnings and sales growth provides sound underpinnings for its meteoric ascent, and I think there’s more to come.
Last week’s retreat was the first significant dip we’ve seen since the earnings gap. It returned prices to the rising 50-day moving average, which has been a perfect buy spot all year long. This episode is proving no different, with DKS stock up nearly 4% in early Monday trading. A run to $100 and beyond looks likely.
The Trade: Buy the July $95/$100 bull call for $1.95.
The risk is $1.95, and the reward is $3.05.
Top Stock Trades: Eli Lilly (LLY)
Eli Lilly rounds out this week’s hat trick of top stock trades with a gorgeous bull retracement pattern. The pullback buy pattern follows an epic breakout through $210. Over 17 million shares traded on that day, marking its most active session in over two years. It’s important to note that all three filters I use to gauge the legitimacy of a breakout are giving the green light to the June 7 launch.
Price pushed $25 beyond the ceiling. Volume (as already mentioned) surged to some 400% beyond the average day. Time has kept prices above the breakout zone for over two weeks now.
Last week’s dip was a godsend for those who missed the initial breakout. It’s the first low-risk entry opportunity we’ve seen since. And this morning’s 2% pop signals buyers aren’t wasting their time.
The Trade: Buy the July $225/$235 bull call for $2.65.
The risk is $2.65, and the reward is $7.35.
On the date of publication, Tyler Craig held long positions in DKS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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