Top Stock Trades for the Week of April 4, 2022

stock trades - Top Stock Trades for the Week of April 4, 2022

Source: Shutterstock

  • Invesco QQQ ETF (QQQ) offers a diversified way to buy the dip in tech stocks.
  • Apple (AAPL) is pulling the technology sector higher and sits a stone’s throw from record highs.
  • Microsoft (MSFT) just completed a double bottom pattern.

Stocks ended last week with a three-bar pullback after a momentum-infused rally. It’s a classic buying opportunity beckoning to chart watchers everywhere. While many areas look appealing, the technology sector offers the cleanest setup. For that reason, I’m spotlighting three smart ways to play for this week’s top stock trades.

The Nasdaq’s re-emergence is a welcome development. Recall that growth stocks had been hit the hardest throughout the market correction due to rising interest rates and a shift in investor preferences toward value. The rotation was particularly burdensome for the most richly valued and speculative names, but it also took a toll on heavyweight tech giants. From peak to trough, the Nasdaq Composite retreated 22%.

But we just scored one of the sharpest and most persistent recoveries on record. With investors racing back into tech stocks, now is a perfect time to consider your options. Here are three stock trades that top my list.

Ticker Company Price
QQQ QQQ ETF 367.22
AAPL Apple 177.22
MSFT Microsoft 313.47

 

Top Stock Trades: Invesco QQQ ETF

Invesco QQQ ETF (QQQ) stock chart with bull retracement pattern.

Source: The thinkorswim® platform from TD Ameritrade

The Invesco QQQ ETF (NASDAQ:QQQ) offers an efficient and diversified path to purchasing the entire Nasdaq. You get exposure to all the tech giants while not having to worry about a single earnings announcement sinking your ship. And that’s a particularly nice advantage given that we’re entering Q1 earnings season.

Since bottoming in mid-March at $317.45, QQQ went straight up 17% before last week’s multi-day retracement. The pullback provides the first chance to buy the dip since the daily trend turned back up. And buyers were aggressively wading into the waters Monday morning. Assuming the bounce sticks, this is a marked change in character from the drama of the last few months.

With prices above the 50-day and 20-day moving averages, it’s worth giving the new uptrend the benefit of the doubt.

The Trade: Buy the June $370/$390 bull call spread for $9

You’re risking $9 to make $11 if QQQ climbs past $390 by expiration.

Apple

Apple (AAPL) stock chart with bull retracement pattern.

Source: The thinkorswim® platform from TD Ameritrade

If you thought the bounce off the lows was impressive in QQQ, check out the rocket-like resurrection in Apple (NASDAQ:AAPL). The giver of all i-Things ripped 20% off the lows in 11 straight sessions. And then, rather than give it all back in a deep retracement, buyers only allowed a shallow pullback to develop before piling right back in. AAPL shares ended Friday with a bullish reversal candle and rallied 1.6% in early morning trading on Monday.

What’s more, the all-time high from January is now within striking distance. Assuming we tag it in the coming days, AAPL will be one of the first tech giants to return to its peak. This proves its relative strength and leadership status. And, it makes Apple a must-buy if you’re shopping in the tech sector.

The Trade: Buy the June $180/$195 bull call spread for $4.90.

You’re risking $4.90 to make $11.10 if AAPL rises past $195 over the next 74 days.

Top Stock Trades: Microsoft

Microsoft (MSFT) stock chart with bullish retracement.

Source: The thinkorswim® platform from TD Ameritrade

Microsoft (NASDAQ:MSFT) rounds out this week’s top stock trades with a freshly printed double bottom pattern. Last week’s decline pulled prices back to the old resistance zone, and so far, it is holding as new support. The fact that prices are playing so well with these horizontal thresholds makes me like the MSFT even more.

The recent completion of the double bottom gives the stock a solid base to build from and brings validity to the new uptrend.

Prices are also back above all major moving averages giving bulls much less overhead resistance. I think MSFT stock will work its way back up to last year’s highs near $350.

The Trade: Buy the June $315/$345 bull call spread for $10.20

The max loss is $10.20, and the max gain is $18.80.

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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