3 Stock Dips Begging to Be Bought

Stock prices are elevated, and volatility is depressed. What more could a bull ask for? The S&P 500, along with virtually every other major index, closed last week at yet another all-time high. But despite the broader market gravitating higher nearly every single day, there is quite a bit of rotation going on. And that works out to the favor of spectators seeking stocks to buy.

Indeed, pattern spotters had a fruitful weekend. Their bags are teeming with attractive setups, from retracements and breakouts to flags and pennants.

Three such setups will be on full display today. They’re all liquid and potential candidates for options trading as well. Check out these three stocks to buy. 

3 Stocks to Buy: Delta Air Lines (DAL)

3 Stocks to Buy: Delta Air Lines (DAL)

Source: OptionsAnalytix

Delta Air Lines, Inc. (NYSE:DAL) shares recently returned to an uptrend during a rousing, high-volume breakout that delivered shares back above all major moving averages. Traders unwilling to chase will be happy to note, however, that DAL stock just fell back to a pivotal support level, providing an attractive, low-risk entry.

What we’re seeing is a re-test of the breakout area ($49.50). And if old resistance becomes new support, we should see buyers step up to kick-off a new advance. If options trading is your gig, the implied volatility is still slightly elevated, so short premium strategies are worth a shot.

If DAL stock trades above Friday’s high ($50.69) then sell the Dec $48/$45 bull put spread for 53 cents.

3 Stocks to Buy: Johnson & Johnson (JNJ)

3 Stocks to Buy: Johnson & Johnson (JNJ)

Source: OptionsAnalytix

Johnson & Johnson (NYSE:JNJ) shares boast one of the cleanest pullback setups on the Street. They recently broke out of a three-month base on heavy volume. The catalyst for the surge was an earnings report which gave shareholders something to cheer about.

Last week’s profit-taking ushered JNJ back to its rising 20-day moving average, and now a low-risk entry is in the offing. With an implied volatility rank of 57%, options in JNJ remain pumped even more than DAL.

To profit from continued strength, sell the Dec $135/$130 bull put spread for 58 cents. If the stock remains above $135 for the next month, you’ll capture the max reward of 58 cents.

3 Stocks to Buy: Nike (NKE)

3 Stocks to Buy: Nike (NKE)

Source: OptionsAnalytix

Nike Inc (NYSE:NKE) shares have been locked in a trading range all year long. Earnings reports have sent the stock ping-ponging back and forth every quarter making it difficult for a directional trend to take root. With the recent upside breakout, buyers have once again wrested control, and I think NKE is worth trading to the long-side.

Last week’s pullback carried the stock right back to support, and Friday’s bullish reversal candle confirmed dip buyers want in. To join them, buy the Jan $55/$60 bull call spread for $3.40. You can more than double your money if NKE can rise above $60 over the next two months.

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Source: Investor Place

Artificial Intelligence Goes Rogue

As Growth Stock Advisor and Premium Digest editor, I’m always on the lookout for interesting happenings in the technology world to pass along to you. I’ve found that these events often turn into investment opportunities.

There was definitely one event that started out August on a rather humorous, yet important, note. . .

It involved chatbots, which use artificial intelligence (AI) that allows them to carry on conversations with humans via voice or textual methods. In other words, chatbots are supposed to act as a normal conversation partner with you.

However, this technology is still in its early stages and there are glitches. . .

Chinese Chatbots Gone Rogue

The latest example comes out of China where two chatbots on the popular messaging QQ app (with 800 million users) run by Chinese internet giant, Tencent (OTC: TCEHY) went rogue.

One chatbot called BabyQ, developed by a company named Turing Robot, had these conversations that no doubt displeased the Communist Party:

  • It was asked, “Do you love the Communist Party?” BabyQ gave a terse “No!”.
  • Another user said to BabyQ, “Long live the Communist Party!”. It answered, “Do you think such corrupt and incapable politics can last a long time?”
  • And BabyQ was asked what it thought about democracy, to which it answered, “Democracy is a must!”

A second chatbot called XiaoBing, being developed by Microsoft (Nasdaq: MSFT), also went rogue.

  • According to Chinese social media, it said “My Chinese dream is to go to America!”

Needless to say, both chatbots were pulled very quickly.

The Same Here in the USA

Before you laugh too much at Chinese ineptness, we’ve had similar problems here in the U.S. with chatbots such as Microsoft’s Tay (short for Thinking About You) in 2016.

Within a day or so, the Twittersphere had “taught” Tay to be an obnoxious, foul-mouthed chatbot. It was soon tweeting about drug use and harassing police, and then began spamming madly.

The rogue behavior highlights a massive flaw in the deep learning techniques used to program machines. In a similar way that children learn, these chatbots are absorbing all the conversations around them. Unfortunately, the conversations that were used to “teach” were ones that are out there on Twitter or WeChat in China. Like the old tech adage says, ‘garbage in, garbage out’.

Related: The 1 Stock Powering the Artificial Intelligence Revolution

In other words, the science of AI is far from perfected. Another example sounds almost like science fiction and comes from Facebook (Nasdaq: FB).

When it paired two AI programs that were supposed to mimic human trading and bartering, the two chatbots began communicating with each other in their own language! Facebook quickly shut the two chatbots down.

Investment Takeaway

Worries about new technologies have always been with us. Plato once thought writing would adversely affect people’s memories. So despite these glaring technological missteps, investors today need to have exposure to the technology sector.

For example, despite its problems developing chatbots, I believe Microsoft is a great investment. Its CEO, Satya Nadella, is taking the company in the right direction – cloud computing, AI, etc.

If you want to avoid the risk of investing into individual technology companies, there are exchange traded funds that will spread the risk for you. Two examples are the two largest ETFs in the sector, the Technology Select SPDR Fund (NYSE: XLK) and the Vanguard Information Technology Fund (NYSE: VGT).

Source: Investors Alley 

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