The technical behavior of the major market stock indices continues to toe the bullish line. Every dip, however small, is getting snatched up and shows that buyers remain alive and well. Tuesday’s sharp intraday rally off of the 20-day moving average in the S&P 500 is the latest example, and it has prices headed toward another record. After scouring my lengthy watchlist of stocks to buy, I found three in particular that demand our attention.
Their patterns are slightly different, but there’s one common theme tying them together – momentum. Each stock either recently saw or is now seeing a notable uptick in volume and price appreciation. They are the type of signals that give way to higher prices and easy profits for bulls.
Two of the three have a robust earnings report to thank for the boost. The third setup comes on the back of a consistent uptrend and a long line of buyable dips.
That said, here are the stocks in focus:
After the usual chart review, I’ll divulge my favorite options strategy for banking on their next leg higher.
Bullish Stocks to Buy Now: Facebook (FB)
Facebook shares slipped after earnings, but the selling pressure wasn’t all that dramatic. Far from suffering a massive support break, FB stock merely retreated to its rising 20-day moving average.
With that, the technology titan formed a tempting opportunity to grab shares on the cheap. It’s not just the moving average test that interests me, however. We’re also filling a price gap that formed from July 23’s jump.
Gaps, when filled, often become support.
Tuesday’s candle sported a lower wick and showed that buyers are already starting to swarm. Wednesday’s 2.5% pop is adding further confirmation that the next advance is upon us.
Given the stock’s history of substantial advances, I like a directional play here.
The Trade: Buy the September $360/$380 bull call spread for $7.50.
Camping World (CWH)
Camping World launched to the top of my watchlist Wednesday after the retail company announced better-than-expected earnings numbers. CWH stock was up as much as 8% in midday trading.
But it’s not just the single-session rally that interests me. It’s the breakout and trend reversal that we’re seeing as a result of the ramp.
Just Tuesday, CWH found itself below the 20-day and 50-day moving averages. Its daily trend was also messy. However, with the breakout, the daily trend is back to bullish, and we’re now well above all major moving averages.
We’re also completing a double bottom pattern that creates a compelling buying opportunity on the weekly time frame.
Camping World shares are more volatile than most, so I’m favoring a cash-flow play over a directional one. Despite the implied volatility crush that accompanied earnings, you can still go pretty far out-of-the-money and sell puts.
The Trade: Sell the September $33 put for 50 cents.
Bullish Stocks to Buy Now: Snap Inc (SNAP)
For the final of our stocks to buy now, we’re looking at SNAP. The technology company is two weeks off of its stellar earnings report. The Street loved its performance and responded by jamming SNAP stock up 24% to a new record high.
Given the magnitude of the move, I’m always a buyer on the next dip. And, well, SNAP just dipped. The past seven sessions have seen a mild pullback materialize, returning prices to a more palatable entry.
Wednesday’s 3.6% pop is all the confirmation needed that buyers are finally pouncing, and the dip is likely done. I like joining in here with a bull call vertical spread.
The Trade: Buy the October $75/$85 bull call for $3.70.
On the date of publication, Tyler Craig was long SNAP and CWH. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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