Earnings from Netflix, Inc. (NASDAQ:NFLX) and Goldman Sachs Group Inc (NYSE:GS) stole the show, but there were a number of other stocks on the move Tuesday. Now, let’s see how they’re setup for Wednesday. Here are 5 trades for tomorrow:
#1 Netflix Stock
Netflix beat on top and bottom line earnings estimates and crushed subscription estimates as well as guidance. Here’s the breakdown and here’s what the charts say for a trade:
Right now, Netflix’s market cap is just $7 billion away from Walt Disney Co (NYSE:DIS). In any regard, the stock’s breakthrough and retest of its downtrend line (purple) was a textbook bullish move.
Earnings then propelled NFLX through $334 and to new highs. It would be incredibly bullish to see another day of continuation, followed by an eventual pullback-and-hold of this $330 level.
#2 Goldman Sachs Stock
Like the banks before it — JPMorgan Chase & Co (NYSE:JPM), Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C) and Wells Fargo & Co (NYSE:WFC) — Goldman Sachs beat on earnings and revenue estimates but saw its stock trade lower. FYI: Here are 12 things to know about its quarter.
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It was not bullish to see a gap up and selloff from Tuesday’s highs. Especially as it plunged GS stock below the 50-day and 100-day moving averages. Bulls are now faced with two situations: Either buy on a pullback into support near $245 (around where the 200-day should also come into play) or on a breakout over resistance near $262.50.
#3 The SPDR Gold ETF Trade
Remember gold? Well the Gold SPDR Trust ETF (NYSEARCA:GLD) is now approaching a two-year breakout level.
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The chart’s not perfect, but we can see that since December 2016, the GLD has been sluggishly making its way higher. However, it continues to hit its head against the $129 level. You know what they say: the more times a level is tested, the more likely it is to give way.
Gold bugs are hoping that’s the case here. You can either buy on a pullback into support or on a breakout over $129, whichever comes first. In both cases, we have a solid risk/reward in case the trade goes south.
#4 International Business Machines Stock
Led by Netflix and the rest of FANG — Facebook, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOGL) — tech is getting a lift on Tuesday. That includes IBM (NYSE:IBM).
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With today’s move up through $160, the stock has cleared a notable level on the chart. By and large, IBM stock has been stuck between $148 and $160 since its earnings-fueled gap-up in October. The move is impressive, but admittedly on low volume. Our yellow circles show IBM stock isn’t overbought and has decent momentum too. Over $162 and I’d be more compelled to dip my toes in the water looking for a run to its prior highs near $169.
With earnings after the close on Tuesday though, we’ll have to see where this one settles down. A gap up and pullback to ~$160 wouldn’t be the worst action. A decline would likely send it back toward $150.
#5 Southwest Airlines Stock
Shares of Southwest Airlines Co (NYSE:LUV) are taking a hit right now. So far, shares are down 3% with social media storm caused by Southwest’s emergency landing due to engine troubles. The stock trades at just 10 times earnings, but there’s reason for caution — at least among traders.
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In black, we have a downward range. With Tuesday’s action, LUV stock looks destined for the bottom of it, near $53. That’s also where we have a line of support drawn (in blue). Unless this support is tested and holds or LUV breaks out of this range, it’s a no-touch on the long side.
When it looks foolishly obvious, sometimes you’re the fool. But I see no reason to chase LUV until it tests those levels and they hold. Note that the airline reports earnings on April 26th.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell held a position in DIS, JPM and GOOGL.
