3 Stocks To Buy In The Aftermath Of The Rate Cut

stocks to buy

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Sell puts for cash flow in these three stocks

The Federal Open Market Committee cut their target rate for the first time in a decade as expected. Market watchers have also been pricing in an additional one or two cuts by year-end. But comments by Fed Chair Jerome Powell during the news conference put into question whether we’ll actually see further easing.

Rather than getting bogged down in a game of will-they-won’t-they, let’s keep things simple. The silver lining of Wednesday’s beatdown is it pushed many recent earnings winners back to low-risk entry points. My watchlist is littered with potential buy-the-dip candidates.

Here are three of the best stocks to buy in the aftermath of the Fed.

Stocks to Buy After the Fed: Twitter (TWTR)

TWTR Chart

Click to Enlarge / Source: ThinkorSwim

Twitter (NYSE:TWTR) finds itself amid bullish earnings and price trends. The past two quarterly reports saw better-than-expected numbers, and its price trend has been trending higher. Last week’s boost was particularly potent, driving TWTR stock to a new 52-week high.

The follow through seen since has been impressive and speaks to buyers’ willingness to pay up even after the post-earnings pole vault.

With the positive underlying fundamentals, future weakness in the stock should prove fleeting. I like selling naked puts for the next few months to score some cash flow.

Sell the Sep $38 put for around 55 cents.

Google (GOOGL)

GOOGLChart

Click to Enlarge / Source: ThinkorSwim

The theme of powerful earnings gaps continues with our next pick. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has a history of the direction of its jump following earnings signaling the price trend for the quarter. Down gaps have usually sparked multi-month downtrends while up gaps have kick-off or accelerate uptrends.

I’m betting last week’s pop will prove no different. The robust earnings beat that drove traders to push GOOGL stock up 9% in a single session will likely continue to support the stock moving forward. And that makes GOOGL a tempting buy into any weakness, like the past three trading sessions. Compared to the beatdown elsewhere, yesterday’s post-Fed slip in Alphabet shares was nothing.

To bank on our bullish bias, let’s sell a Sep $1150/$1140 bull put spread for $1.40. Consider it a bet that GOOGL sits above $1,150 at expiration.

Snap (SNAP)

SNAP Chart

Click to Enlarge / Source: ThinkorSwim

My final pick for stocks to buy in the aftermath of the Fed is Snap (NASDAQ:SNAP). The rationale for its inclusion mirrors that of its predecessors. Its uptrend is bangarang and last week’s earnings reaction simply added fuel to an already raging fire.

SNAP stock’s year-to-date gains have now climbed to a mouth-watering 213%, and we still have five months to go. Chasing stocks after such a monster move post-earnings is challenging, but that’s what makes this week’s three-day retreat so appealing. It’s providing a lower-risk entry for traders hesitant to pile in after the strong up-gap.

Today’s bullish candle is confirming buyers’ dip-buying desires, suggesting now’s the time to enter. The cheap price tag of SNAP makes it a compelling candidate for naked puts. Sell the Sep $15 put for 35 cents.

As of this writing on August 1, 2019, Tyler Craig held bullish positions in GOOGL.

 

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