The Covid-19 omicron variant continues to roil equity markets. If that weren’t enough uncertainty to grapple with, Federal Reserve Chair Jerome Powell commented about possibly accelerating the pace at which the central bank tapers its bond-buying program. Despite all the market drama, the following three stocks to buy closed green on Tuesday.
And that makes them very much worth exploring. I don’t think I can overemphasize just how fear-filled and panic-driven Tuesday’s session was. The S&P 500 closed down just shy of 2%, with 148 million shares changing hands. While we have seen a few other days in 2021 with higher volume, there aren’t very many. And do you know what they all had in common?
They all marked short-term lows in the market, which makes me optimistic for a snapback. But, of course, the following picks do not need a rebound – they’ve been going up!
Today we’ll explore why buyers have found them so compelling. And, more importantly, how to profit if the love fest continues.
Stocks to Buy: Apple (AAPL)
Do you find it as interesting as I that on a day where the S&P 500 got hammered and closed at the session low, its largest holding jumped 3.16%? AAPL stock might as well have been an inverse ETF, for heaven’s sake. It appears market participants believe the tech behemoth is the ultimate safe haven, the least likely of all the market’s kingpins to suffer from any ill winds that may arise due to the omicron variant.
You can quibble with the fundamental outlook all you want, but there’s no denying the relative strength this week. An epic volume spike confirmed Tuesday’s price surge. While the pace of gains should slow in the coming days, the path of least resistance is undoubtedly higher.
Consider buying call spreads to participate.
The Trade: Buy the January $165/$170 bull call spread for $2.25.
Tesla (TSLA)
Tesla fought to stay positive on Tuesday and succeeded with a 0.68% gain. Bucking the market trend isn’t new for the popular EV stock. It’s been blazing its own trail for years. What began as a cult stock has grown to become the fourth-largest company in the S&P 500. Like Apple, I find the relative strength impressive in the face of such a massive beatdown.
The price trend isn’t as clean as AAPL stock, but Tesla prices are a stone’s throw from new highs and above all major moving averages. The price formation of the past month is a symmetrical triangle suggesting short-term congestion for the overall uptrend. The lower pivot highs and accompanying descending trendline make it tricky to nail down an easy trigger for new bullish trades.
Consider using either Tuesday’s high of $1,168 or $1,200 to signal an upside breakout.
The Trade: Buy the January $1250/$1300 bull call spread.
It’s currently trading for $15.50 but will cost more if you wait for confirmation.
Stocks to Buy: Pfizer (PFE)
Pfizer rounds out today’s stocks to buy. Its outperformance doesn’t require much imagination to grasp. The return of Covid-19 concerns thrusts drug company’s that manufacture vaccines back into the public consciousness.
Remember, it was Pfizer’s announcement that they created a hyper-effective vaccine that jumpstarted the stock market’s recovery last November. So it makes sense that traders would return to the well amid fears of a new variant.
The price chart of PFE stock was trending higher above all major moving averages even before the past week’s events. All the newfound attention has done is add fuel to an already red-hot fire.
If you’re willing to wager the strength persists, then deploy bullish plays. I like short puts for a higher probability of profit.
The Trade: Sell the January $50 put for $1.25.
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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