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3 Top Stock Trades for the Week Ahead

This week's list brings you a hot healthcare stock, an emerging tech play and a retailer ready to run

top stock trades - 3 Top Stock Trades for the Week Ahead

Source: Shutterstock

Another week has come, and I have a fresh batch of top stock trades to bring to your attention. However, before I reveal these names, let’s first recap why market winds remain at the back of buyers.

If you want the short version, just look at the Nasdaq Composite jamming yet another all-time high on Monday The buying binge in technology has been relentless, and no doubt demoralizing to short sellers. At the same time, even when we do see weakness, it never lasts. Take the financial sector, for instance. It was on the verge of a nasty breakdown, and then — WHAM! A pair of bank upgrades blasted it higher on Friday, and it’s cruising even further thus far on Monday.

In turn, bears just can’t get a break. Perhaps the forthcoming earnings season will finally provide some negative catalysts. And if it does, rest assured, we’ll highlight the best short-leaning setups.

For now, however, I’m sticking with buyers. Therefore, here are three of my top bull trade ideas for the week:

  • Amgen (NASDAQ:AMGN)
  • Slack Technologies (NYSE:WORK)
  • Lululemon (NASDAQ:LULU)

It’s a diversified list with each pick coming from a different sector. So, with all of that in mind, let’s zero-in on why these top stock trades deserve to be on your radar.

Top Stock Trades for the Week Ahead: Amgen (AMGN)

Amgen (AMGN) stock chart showing bull retracement pattern
Click to Enlarge
Source: The thinkorswim® platform from TD Ameritrade

The chart of Amgen belongs in a technical analysis textbook. It’s just that pretty.

First, we have a high volume breakout propelling the price through a major resistance zone ($245). The three-day followthrough jammed AMGN $20 higher to a new record before profit-taking finally took root.

Since then, however, we’ve seen a classic four-day retracement form on decreasing volume. The momentum of the descent has slowed alongside the dwindling participation. That said, this is a positive omen and provides the selling pressure is waning.

We’re now closing in on the old resistance zone of $245. If the principle of polarity holds, we should see this critical ceiling become significant support.

Implied volatility is relatively low at 27%, making long premium plays the way to go.

The Trade: Buy the Aug. $250/$260 bull call spread for around $3.80.

Slack Technologies (WORK)

Slack (WORK) stock chart showing breakout pattern
Click to Enlarge
Source: The thinkorswim® platform from TD Ameritrade

With so many rocket ships zipping higher in the technology sector, some would say it’s hard to get excited over a laggard like Slack. But, that’s actually one of the reasons I like it. It’s not near as overextended as Amazon (NASDAQ:AMZN) or Tesla (NASDAQ:TSLA). And that makes the risk/reward more compelling.

Last month’s earnings pulled the rug out from under WORK stock, but we’ve since established key support at $30. This week’s ramp carried the stock back up to an old resistance pivot, and its unfilled earnings gap. If we can take out $34.75, I think a quick move toward $38 could be in store.

The Trade: I think you can take your pick of bull trades here. If you prefer a higher probability play, then sell the Aug. $30 puts for around $1.20. Alternatively, if you want a more bullish directional trade, then buy the Sept. $35/$40 bull call for about $1.50.

Top Stock Trades for the Week Ahead: Lululemon (LULU)

Lululemon (LULU) stock chart showing potential breakout pattern
Click to Enlarge
Source: The thinkorswim® platform from TD Ameritrade

Lululemon might be the best performing retail stock on the Street. Its astounding ascent finally found sellers after last month’s earnings announcement ushered in some much-needed consolidation. But the pause has been constructive, allowing the 50-day moving average to catch-up and overbought pressures to ease.

Last week’s sideways movement created a high base pattern that is on the cusp of completion. I can see two potential trigger points for bullish trades. Either play the break above $320, or wait for a rise above the all-time high of $325. A breach of either ceiling could signal LULU is ready for the next leg of its uptrend.

Meanwhile, implied volatility is quite low — sitting at the 17th percentile of its one-year range. It makes bull call spreads a smart play.

Buy the Sept. $320/$340 bull call spread for $8.00

For a free trial to the best trading community on the planet and Tyler’s current home, click here! At the time of this writing, Tyler held bullish positions in WORK.

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