3 Bull Flag Stocks To Buy

| September 30, 2019 | 0 Comments
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The bulls’ banner waves in these three stocks. Buy them.

The drama unfolding in Washington has turned the uncertainty dial up to 11. But many stocks are staying above the noise and actually offer compelling setups ahead of the weekend. Today we’ll look at three of the best stocks to buy.

Wednesday’s rally was important. It brought market indexes back from the brink and confirmed buyers remain in control of the short-term trend. And that is keeping the hopes alive for another run toward record highs. The silver lining of the last week of selling is it has created bull flag patterns in many stocks.

As the name suggests, the chart setup looks like a flag and forms when an uptrending stock pauses to collect its breath. It creates a lower-risk entry to deploy bullish trades.

Here are three of the best bull flags to trade.

Bull Flag Stocks to Buy: Activision Blizzard (ATVI)

ATVI Chart

Click to Enlarge / Source: ThinkorSwim

Activision Blizzard (NASDAQ:ATVI) turned a corner last month and hasn’t looked back since. The stock’s breakout was a year in the making, and its followthrough has been textbook. Profit-taking struck two weeks ago, and we’ve since seen a slight pullback emerge.

Pattern spotters will note the retreat has created a bull flag that is creating a potential buying opportunity. Wednesday’s test of the rising 20-day moving average was successful with buyers swarming to defend their turf.

Watch for a break above the high ($55.15) to signal the next leg has begun.

Implied volatility is currently in the basement suggesting long options trades are the way to go. When the stock trigger, buy the Jan $55/$60 bull call spread for around $2.

Nvidia (NVDA)

NVDA Chart

Click to Enlarge / Source: ThinkorSwim

The entire semiconductor industry is flashing a bull flag pattern, and Nvidia (NASDAQ:NVDA) might be one of the most compelling components. Last month’s earnings announcement finally sent the bears into hibernation and allowed an uptrend to take root. The series of higher swing highs and lows that have formed gives buyers all the reason they need to put NVDA stock back on their radar.

Wednesday formed a strong bullish engulfing candle that signals to buyers that NVDA could be ready for another run. Watch for a break above the highs ($179) to confirm, then enter bull trades.

The theme of low implied volatility or cheap options continues with Nvidia. Its implied volatility rank sits at a lowly 13%, making bull call spreads an attractive idea. Buy the Dec $180/$190 bull call spread for around $4.30 if the stock triggers.

Alphabet (GOOGL, GOOG)

Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) rounds out today’s trio, and though it isn’t exactly a bull flag, Wednesday’s monster bullish candle was too good to pass up. The past week of consolidation created a high base pattern that shows continued buying pressure every time weakness cropped up. Once $1,250 is taken out, GOOGL stock has room to run up to $1,300.

Spectators turned off by Alphabet’s hefty price tag don’t need to be. You can use bull call spreads for a cheap upside bet. Like its predecessors in this article, GOOGL stock boasts low implied volatility, which helps keep the price of calls minimal.

Watch for a break above $1,250, then buy the Dec $1,250/$1,270 for around $10.

As of this writing on September 27, 2019, Tyler Craig held bullish positions in ATVI.

 

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Category: Options Trading Strategies

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The author of this article is a contributor to InvestorPlace.com.

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