Editor’s Note: This article is updated weekly to bring you fresh trade ideas.
The stock drop into the weekend has some bulls pulling in their horns. But this morning’s sharp rebound suggests the caution may be unnecessary. As concerning as the slip may have been, none of the major indexes broke support last week. Rather than tempt fate with bear picks, we’re sticking with what has been working in this week’s top stock trades edition.
Three areas of the market caught my eye when scanning for candidates. Steel stocks have been riding high in a continuation of the inflation trade that began many months ago. We’re focusing on a leading stock in the industry that offers a breakout trade. With gold’s recent bottoming pattern and nascent uptrend, gold miners are turning a corner. Today’s choice has a clean buy-the-dip setup. Finally, the healthcare sector has emerged as a new market leader. I found a tasty stock on the cusp of blasting through a major ceiling.
With that, here are the top stock trades for the week:
After a brief analysis of each chart, I’ll reveal my preferred options trade idea.
Top Stock Trades for the Week: Nucor (NUE)
The rebound in Nucor earnings has been mighty impressive. Earnings per share for the past four earnings reports has gone as follows: 36 cents, 63 cents, $1.30 and $3.10. It’s a wonderful growth trend and speaks to the fundamental strength fueling the stock’s rise. With this year’s rise, we’ve now risen past a decade of chop and are testing the old peak from 2008.
A high base pattern has developed over the past month, allowing overbought pressures to ease and a more palatable entry to develop. We’ve been flirting with an upside breakout over the past two sessions, and today’s ramp could be confirming the ceiling has been cleared.
Implied volatility is at the 1st percentile of its one-year range. Long call spreads offer a cheap bet for further upside.
The Trade: Buy the July $85/$95 bull call for $2.70.
Agnico Eagle Mines (AEM)
Gold prices are turning higher. The yellow metal recently completed a double bottom pattern and has been well-behaved ever since. Last week’s pullback resulted in a retest of old resistance and its rising 20-day moving average. Breaching both levels would have placed the double bottom breakout into question and made the chart unnecessarily messy. Fortunately, buyers swarmed over the weekend, and we’re seeing gold prices roar this morning.
Silver is following in-kind, as are gold mining stocks. And that’s where Agnico Eagle Mines comes in. It had one of the best setups in the industry, heading into the new week with a textbook bull retracement pattern. Its earnings report was last week, so we now have one less news item to worry about.
This morning’s 5% rip is confirming buyers are swarming in to gobble up the dip. Join them.
The Trade: Buy the June $65/$70 bull call spread for $1.85.
The healthcare sector woke up in April with a momentum-laced surge to new record highs. Those hesitant to chase were given a gift last week when the sector pulled back for five straight trading sessions. The retracement ushered prices to the doorstep of the rising 20-day moving average, which is a logical spot for buyers to pounce.
The quality of the pattern demanded doing something in the healthcare sector this week. AbbVie is my final top stock trades pick. Unlike the previous two charts, I’m sharing the weekly time frame for ABBV because of its imminent breakout pattern. The stock has been chopping sideways for all of 2021 and is now on the verge of breaking out. I’m eyeing $113 as the trigger point.
The theme of low implied volatility continues with ABBV stock, so I’m once again going with a bull call spread idea.
The Trade: Buy the July $115/$120 bull call for around $1.55.
On the date of publication, Tyler Craig did not have (either directly or indirectly) any positions in the securities mentioned in this article.
For a free trial to the best trading community on the planet and Tyler’s current home, click here!