The seemingly endless trade war has left countless victims maimed and wounded in its wake. Escalating tariffs and slower global growth is taking a bite out of corporate profits and souring full-year forecasts. But not all companies are getting bogged down by the brouhaha. Today we’ll look at three internet stocks to buy that are holding firm.
Identifying which companies are being hurt or helped or are unaffected by the trade war is a simple matter of following price. There’s no need to dive deep into balance sheets and investigate business models. A glance at the price chart reveals all you need to know.
Stocks that are immune to the trade war are ones that are flying high. They boast strong trends and relative strength in spades. If these companies had vulnerabilities to the U.S.-China food fight, then they wouldn’t be skirting the stratosphere. One common theme tying together today’s trio is they’re all internet stocks.
Let’s take a closer look at these internet stocks to buy.
Snap (NYSE:SNAP) shares got a bit overheated after last month’s earnings report. The numbers were good enough to deliver a three-day 24% rip to new 52-week highs. Since then we’ve seen profit-taking strike, and the gains have been thoroughly digested.
The past month of consolidation has taken on the form of a falling wedge that is providing a lower-risk entry point. Last week’s test and bounce off the 50-day moving average confirmed dip buyers are still alive and well. This morning’s 3% rally could signal the completion of the flag and beginning of the next advance.
Watch for a break over the 20-day moving average ($16.75), then deploy bullish trades. Buy stock or buy the October $15 calls for around $2.10.
New IPO stocks are always on the radar of momentum traders. Their higher volatility and potentially explosive growth make them prime targets for these big game hunters. July’s earnings report and subsequent gap higher for Pinterest (NYSE:PINS) shares put it on the map. Yesterday’s breakout to all-time highs has spectators salivating.
Though PINS stock is retreating this morning after a powerful three-day run, weakness has to be viewed as a buying opportunity given its strong uptrend. Multiple potential support levels will come into play if the selling pressure continues. The 20-day moving average near $32 also houses a horizontal support zone and unfilled gap.
I fully expect buyers to vigorously defend their turf if we end up pulling back that far. PINS lower price tag makes it an ideal candidate for naked puts. If you’re willing to bet, we remain above $31 for the next month then sell the September $31 put for 50 cents.
Our final pick is Twitter (NYSE:TWTR) which sits a stone’s throw from new 52-week highs. Its trend is strong, and the 20-day, 50-day, and 200-day moving averages are stacked atop each other in bullish fashion. The past month has built a box between $43.50 and $40. And while this morning’s 2.5% drop is showing TWTR isn’t ready to break out yet, I think it’s only a matter of time before resistance gives way.
A break below $40 would warrant reassessment. Until then it’s game on for bull trades. I like naked put trades on TWTR, just like PINS. If you’re willing to bet, TWTR sits above $38 a month from now, then sell the September $38 put for 50 cents.
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