As they say, we live in an interesting time. And these words certainly resonate right now. But when it comes to investing and the stock market, rest assured trillion dollar companies are great stocks to trade while everything else is just background noise.
It’s been a crazy year. As a species, we are faced with a major Covid-19 problem. Fortunately, and if there is any convenience, technology from outfits such as Enlarge video (NASDAQ:ZM), Teladoc (NYSE:TDOC) and Peloton (NASDAQ:PTON) among other things, helped create a still painful pandemic, to a lesser extent for many of us.
The past 12 months have also been crazy for the stock market. Unsurprisingly, companies like the aforementioned have enjoyed a meteoric rise from a near-all-out bear market last March for risky assets. But these select ventures were far from alone and, oddly enough, not even the stars of the show. There were other, even better promotions.
At a time when business and government were ordered to work from home and stay at home became a part of everyday life, surprisingly, it was a wave of electric vehicle stocks led by Tesla (NASDAQ:TSLA) and that’s about 700% of the rally, which brought home even bigger trophies. But today is today. QuantumScape (NYSE:QS). ChargePoint Holdings (NYSE:CHPT). Fisker (NYSE:FSR). The list goes on and on, and what it says was ugly.
Much of the leadership that has propelled the 2020 stock market to astounding profits and record highs has been replaced by more defensive blue-chip value-driven investment decisions over the past few months. Caterpillar (NYSE:CAT). Home Depot (NYSE:HD). Chevron (NYSE:CVX). They’re furious again. However, if we are to respect history, today’s costly and recent rotation may also face more challenging conditions ahead.
So what’s an investor to do? If history has taught us anything different, perhaps now is the time to ignore what was happening on Wall Street. On that note, excluded from today’s siren song, let’s examine some of the other market leaders, the price charts of these heavyweights and evaluate which stocks to trade, as well as offer the best investment edge.
Stocks for Trading: Apple (AAPL)
First of all, we will trade in Apple shares. The tech giant and the world’s largest company is currently worth $ 2.13 trillion. But the price chart shows that today’s market cap may be closer to the floor than to the ceiling.
Technically, and as illustrated by the illustrated monthly chart, AAPL stock closes on a Doji candle signal. The decision to buy the model is just over 1% of the current price of $ 128.72. And with a highlighted pattern forming the basis for a healthier, slower uptrend, this trading stock is well on its way to becoming a specific buy stock again.
Preferred Option Strategy: $ 145 Call / $ 120 Put Collar combo.
Amazon is our next stock to trade. More than Zoom Video, Peloton or Teladoc, most of us couldn’t have survived the past year without this tech giant’s many major and minor goods and services. Today, AMZN stock is well positioned for investors, and Jeff Bezos may distance himself even further from the flock as the richest man in the world. Well, maybe. TSLA Ilona Mask may have a say in these matters.
Technically, AMZN has formed a bullish double bottom pattern. The confirmation of the Hammer candle came on Monday and follows a double-failed triangle that has proven equally tough for bulls and bears. Along with a neutralized stochastic indicator and a continuation above the boundary triangle lines for the third time, conditions look more attractive to bullish buyers.
Preferred Option Strategy: July Bullish Call Spread $ 3500 / $ 3900.
Alphabet (GOOGL, GOOG)
The last of our promotions to trade are Alphabet shares. Unlike our other trillion dollar companies, this tech giant’s huge $ 1.5 trillion valuation is subject to increased risk of profit taking and possibly a larger correction. In general, GOOGL stock is not a buy at current levels.
But this does not mean that it is short. Is not.
The technically stable trend after the Covid low in March last year is becoming increasingly risky due to the stochastic overbought and the location of the GOOGL candle above the upper Bollinger band. The adage “The trend is your friend” does not apply here because today’s customers are late for the proverbial party.
To summarize, and in the meantime, this stock to trade, it is time to reduce the risk on existing long positions in Google by using a collar or by selling the stock. And for those who want to buy GOOGL? I think the best opportunities look much more affordable, closer to the main and healthier trendline and Fibonacci support around $ 1,750 to $ 2,000.
As of the date of publication, Chris Tyler does not own, directly or indirectly, positions in any of the securities referred to in this article.
Chris Tyler is a former American and Pacific derivatives manufacturer. The information offered is based on his professional experience, but is intended solely for educational purposes. Responsibility for any use of this information lies with the individual. For more market information and related thoughts, follow Chris on Twitter. @Options_CAT and StockTwits.