Stock prices ebb and flow over time. News, narratives, shifting sentiment, and technical catalysts all contribute to the market noise. But every once in a while, a bona fide signal will emerge that demands spectators’ attention. More than that, it beckons to profit-seekers that now is the time to act. In my daily scanning, I stumbled across three such stocks to buy.
Notably, the bullish price signals in the trio below are all being confirmed by volume. The groundswell lends legitimacy to buyers’ bids.
Remember, market participants fall into two groups: institutions and individuals. It is the former group that bears watching. They have deep pockets, and it pays to bet with them, not against them. Volume spikes or above-average volume sessions suggest when these big buyers are entering the fray.
That said, here are three hot stocks that are seeing bullish price and volume signals:
Let’s take a closer look at each chart. Then I’ll reveal my preferred options trade.
Stocks to Buy: DoorDash (DASH)
The past three sessions have made all the difference for DoorDash. Its share price is up 26% for starters, pulling prices from below the 50-day and 20-day moving averages to above them. Volume exploded along the way, confirming institutions were piling in. The strength was sufficient to push DASH past old resistance to a new all-time closing high.
As is often the case when prices break above significant resistance, buyers have come flocking. I suspect a modest number of short-sellers may also be capitulating now that the last potential ceiling has been shattered.
The read here is simple. With DASH stock bursting to a fresh record on volume, it’s worth betting with bulls.
The Trade: Buy the December $240/$260 bull call spread for $7.75.
You’re risking $7.75 to capture $12.25 potentially.
Airbnb smashed earnings expectations during its latest quarter, reporting its highest-ever revenue and net income. The stock had been steadily climbing before the number but went parabolic afterward. Airbnb has recovered exceptionally well from the pandemic on the fundamentals front, and the recent relaxing of travel restrictions to the United States should further boost its bottom line.
As is often the case, profit-taking struck after the initial post-earnings jump, but a higher pivot low formed to keep the newfound momentum alive. Today’s 6.5%+ rally is further confirmation that dip buyers are willing to support the steeper ascent.
I think the highs near $220 will act as a magnet into year-end. Buy call spreads to participate.
The Trade: Buy the December $210/$220 bull call spread for $3.15
You’re risking $3.15 to make $6.85.
Stocks to Buy: Shopify (SHOP)
Shopify rounds out today’s hat trick of stocks to buy. SHOP stock is up 8.5% in midday trading on Friday. The strength continues the reversal that started last month after the tech darling’s quarterly earnings report. The trend is up across all time frames, and we’re fast approaching old resistance near $1,650.
Given the multiple accumulation days cropping up over the past few weeks, it’s worth betting on buyers pressing the advantage here. Shopify has a long history of rewarding breakout buyers, and I think this episode will prove no different.
The Trade: Buy the January $1660/$1700 bull call spread for $15.50.
You’re risking $15 to make $25 if SHOP rises to $1700 by expiration.
On the date of publication, Tyler Craig did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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