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Stocks  | May 21, 2020

Headlines can be fickle at best. But don’t fret. With more reliable price action indicating unfinished business for today’s bull market, let’s explore two Dow Jones stocks to buy and one to monitor for selling in case a second round of sell-offs comes to pass.

Tuesday’s headlines weren’t the positive signals long-term investors relish. Strong gains by the Dow Jones to start the week, prompted in part by promising novel coronavirus vaccine news from biotech Moderna (NASDAQ:MRNA), were quickly challenged as health experts offered skeptical criticism of the yesterday’s announcement.

The countering headlines saw Monday’s well-cheered gains of nearly 4% chipped away by a dip of 1.59% in the blue chip index. And unsurprisingly, many Dow Jones stocks fared even worse.

Still, when it comes to investing, there’s always the time-tested advice not to fight the Fed. And with the central bank’s chair Jerome Powell offering a positive outlook for the U.S. economy, and assuring investors the Fed still had plenty of ammunition in a TV interview over the weekend, a well-supported market is better than one that isn’t. Right?

The fact is there are no guarantees as to what news might come next. And mind you, just a week ago the Fed Chair was warning of a recession much larger than any since WWII.

  • Apple (NASDAQ:AAPL)
  • Intel (NASDAQ:INTC)
  • Coca-Cola (NYSE:KO)

Yet price action in the blue chip index has remained more positive than not, and well-positioned for another leg higher. And that’s important to respect, at least as long as it lasts. The possibility of a second bearish turn in May can’t be dismissed either. As much, let’s explore two Dow Jones stocks offering strong technical incentives to buy in today’s market and one stock to short, or certainly exit if long, should conditions take a turn for the worse.

Dow Jones Stocks to Trade: Apple (AAPL)

Our first Dow Jones stock is Apple. Unsurprisingly, AAPL is setting up as a “buy.”

The iconic retail brand’s resilience has been nothing short of impressive in the aftermath of March’s Covid-19 driven bear market. I guess we know where some of those stimulus checks may have been going.

Regardless of whether you’re on board with iPhones, AirPods and the likes, the fact is that Apple has been outperforming most other Dow components, plus the index as a whole, for the past several weeks.

That tenacity now has the stock setting up for an imminent breakout from a well-supported handle stationed in the upper region of its well-shaped, daily chart corrective cup base.

Intel (INTC)

Intel is the next of our Dow Jones stocks. Similar to Apple, the semiconductor giant is a “buy.” INTC is in fact ready for purchase right now.

Technically, shares of Intel broke out in Wednesday’s session from a high lateral congestion pattern formed the past few weeks as the stock challenged longer-term angular resistance.

Bottom-line, with resistance now overcome and weekly stochastics trending nicely higher within neutral territory to confirm today’s price action, this Dow component looks great to own today.

Shares have room to rally several percent before encountering its pre-correction and all-time-high. And from there, fresh all-time-highs this summer are waiting in the wings.

Coca-Cola (KO)

The last of our three Dow Jones stocks is Coca-Cola. Unlike our first two blue chip constituents, shares of Coke have been conspicuously weak since the March bottom. And KO stock could be under even greater bearish pressure in the days and weeks ahead.

Technically, a move back beneath last week’s low of $43.20 puts shares in much greater danger of trading aggressively lower. That type of weakness would mark a third failure of the stock’s long-standing uptrend line following March’s decisive, but oversold failure and April’s inside candlestick sporting a slight canary-like warning the worst may be yet to come.

To be clear, there’s key Fibonacci supports below the current share price for investors to potentially rally behind. This Dow Jones stock is also nearing oversold levels as evidenced by its monthly stochastics. Still, if you’re looking for a bear market somewhere, Coca-Cola is the unlucky place to be.

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