Market in Transition as Investors Await Breaking News, 5 Cheap Stocks With Technical Strength and Heavy Option Bets Could Outperform

The stock market has bounced back from the recent correction, though the outlook remains uncertain as further bullish sentiment still needs confirmation. Meanwhile, Trump’s new round of tariffs and the potential government shutdown are looming, but neither should affect overall fundamentals and could instead present another buying opportunity. Investors may now pivot toward “cheap” stocks with solid technical setups, which can play a more defensive role while option traders bet heavily on a further rally. Here are our best five this week.

First, reviewing the overall market, all three indexes rose consecutively after a three-day losing streak, sitting just below historical highs. This could be another record-breaking move or a double-top formation, leaving investors unsure as they continue to assess how a potential shutdown might affect sentiment. If a shutdown occurs, traders would not see Friday’s nonfarm payroll report to evaluate the current state of the economy, leaving the Fed’s path of monetary easing harder to judge, though another two rate cuts this year remain on the table.

Second, as we head into October, investors should prepare for the Q3 earnings season, when results will reveal how companies have performed since tariffs fully took effect. This will determine whether fundamentals justify lofty valuations and whether AI monetization can open more opportunities ahead. The market is now in a transition period that may seem uneventful before the major announcements.

Still, there are names worth watching during this so-called boring stretch. These stocks are trading below their records but show strong technical strength, while solid fundamentals continue to attract heavy option activity, offering more upside in a pricey market.

Amazon (AMZN) remains on the list since last Friday, with recent technical strength reinforcing bullish momentum. The stock rebounded from its sell-off, and the 3-day moving average is turning upward to test the 7-day. If the breakout holds, momentum could accelerate. Meanwhile, there is heavy OTM call activity expiring this Friday, with more than 12,000 contracts at each strike from $222.5 to $240, signaling strong bets on a rally. With only 1% gains YTD and its Claude partnership, AWS may be undervalued.

Roblox (RBLX) gained momentum after Electronic Arts' $55B go-private deal, fueling optimism in the gaming sector. The stock broke a key resistance level and extended its bullish pattern of “higher lows and higher highs.” The next resistance is near 150, just 6% above current levels, and another breakout could imply more upside. Notably, some traders piled into 2025 contracts for $147 OTM calls expiring this week, ten times the ATM level, which is worth noting.

Disney (DIS) is also shaping up well, with the 3-day moving average testing the 7- and 10-day lines while holding above key support. This points to a stronger bullish setup. Meanwhile, about 3,000 contracts remain for OTM calls at $115, $116, and $118 expiring this Friday, suggesting confidence in an entertainment rally. Fundamentally, the company is positioned to withstand Trump’s streaming tariffs as most production is U.S.-based, while China’s Golden Week could drive more visitors to Disney parks this year.

Starbucks (SBUX) shows a chart similar to Disney’s, with bullish patterns and a confirmed “higher low.” The stock is now testing key resistance, aiming to extend its upward trend. Options activity also points to optimism, with 4,641 contracts for $90 calls expiring this week—5% above the current level and quadruple the ATM volume.

Boeing (BA), a symbol of American manufacturing, has seen its stock boosted several times as President Trump positioned it as part of trade deals with other countries. Recently, shares corrected and entered consolidation, but a reversal looks increasingly likely as the 3-day moving average starts to turn higher while the 7- and 10-day averages remain muted. Traders appear confident, with 16,000 contracts outstanding for $230 calls—ten times the ATM level—and another 5,000 at $225. This positioning suggests something significant could be coming for Boeing.

This week’s recommendation list mixes tech with traditional favorites. Their relatively cheap prices compared with the overall expensive market make them safer bets, and it will be interesting to see what unfolds next.