Stock Market Bounce? Buy These Stocks Tickers in this article: PAYC, TXT, FBR, AXS With the uptrend having been relentless over the last few years in the S&P 500, pullbacks have provided opportunities. Eventually one of these pullbacks will turn into a reversal, but that can't prevent a trader from stepping in to buy when viable stock trade setups present themselves. With a stop loss in place, if the stock or S&P 500 continue their corrections, the losses will be limited to less than the profit potential if the price continues higher--as has been the pattern so far. Here's four stocks presenting such setups.
Paycom Software Inc. (PAYC) 
Paycom Software Inc. (PAYC) is up more than 36% year to date (YTD), and continues to put in new highs and higher swing lows--a positive sign for price action traders. Following a strong rise in early May to a high of $39.75, the price pulled back and has found support near $34. After sitting just above $34 for a couple weeks the price is now transitioning back to the upside. Buy between $36 and $35, with a stop loss below $33.85. Shorter-term trades will be looking to exit near $40, just above the May high. A longer-term target is $42, requiring an equivalent sized rally to the one in early May.
Textron Inc. (TXT) 
Textron Inc. (TXT) has been moving steadily higher throughout the year within a trend channel. One option is to buy between $44 and $43.50, near channel support, with a stop loss below $42.97 (April low). The target is $47.25, near the top of the multi-month trend channel. Another option is to buy if the price moves above $42.92, with a stop loss below the most recent low (currently $44.16, but that could change before the price moves above $42.92 to signal the trade). The profit target remains $47.25.
Fibria Celulos S.A. (FBR) 
Fibria Celulos S.A. (FBR) is pulling back (in choppy fashion) after reaching a high of $14.92 in April. It still remains above a rising trendline going back to October and therefore remains a potential long trade candidate. The pullback has taken the form of a triangle pattern; buy a break above the triangle at $14.05. The stop loss can go below $13.50 if that scenario occurs. The target is $15.50 for the trade, attained by adding the approximate height of the triangle pattern to the breakout price.
Axis Capital Holdings Ltd. (AXS) 
Axis Capital Holdings Ltd. (AXS) has been respecting a rising trendline going back to August, and the price is currently moving toward that potential support area. The anticipated support area is between $52.50 and $52, representing a buy zone. A stop loss can be placed below $51. Strong selling entered the market when the stock reached its high of $57.94 in May, so expecting the price to reach that level again in the next few months may be too ambitious. Instead, look to take profits in the $55.50 region. This is a likely resistance area based on the selling which took place following the high.
The Bottom Line When a trend is in place, pullbacks present opportunities. There is always a risk that the pullback will continue, resulting in a losing trade, though. Use stop loss orders to help limit that risk, and set reasonable profit targets which provide a greater potential reward than the risk taken. With this approach, perfection (winning every trade) isn't required. That said, traders should still seek to have as many factors lining up in their favor as possible. Mainly, trade in the direction of the overall trend, buy during pullbacks to support areas and base profit targets off of recent price action tendencies.
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