The stock market continues to churn higher, with the S&P 500 and Nasdaq finally giving bulls a rally they can savor for more than one or two trading sessions. With that in mind, traders who caught some of that upside may want to think about reducing their risk. Here are the top stock trades we’re watching for Friday.
Top Stock Trades for Tomorrow #1: Bank of America (BAC)
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Yesterday, it was JPMorgan Chase & Co (NYSE:JPM), today it’s Bank of America Corp (NYSE:BAC). Shares continued to rally as many big banks still look good. $29 held as support and BAC is back above the 100-day and 200-day moving average.
Consolidation above these two moving averages would be best, so BAC can get the “rest” that it needs to retest its highs near $32.50.
Top Stock Trades for Tomorrow #2: PayPal (PYPL)
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PayPal Holdings Inc (NASDAQ:PYPL) has been on a heck of a rally over the past week. While it’s not overbought yet according to the RSI and momentum still favors the bulls (blue circles), short-term traders may want to consider taking some profits off the table.
With support holding between $70 and $73 along with the 200-day moving average, PYPL has been on a powerful rebound. However, upside could be limited unless shares can puncture through downtrend resistance.
Over this level (blue line) and bulls could have a breakout to feast on. Be careful though, because PYPL may need to rest first before doing so.
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General Electric Company (NYSE:GE) could…be…bottoming?
Knock on wood, but the chart is shaping up pretty good. I’ve been a broken record on GE, saying that it’s given us false bottom after false bottom. Eventually I will miss the bottom in this stock and it will go on a strong rebound.
Maybe that time still hasn’t come, but if that’s the case, this is the most convincing false bottom we’ve had in quite some time. Last week we stressed that $14 needed to hold and now at $14.64, GE has done just that.
Over $15 and the 100-day moving average and bulls can make a genuine case for being long this beaten down conglomerate.
Top Stock Trades for Tomorrow #4: iShares Biotech ETF (IBB)
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The iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) gave us a tantalizing false breakout on Thursday. With that said, not all hope is lost.
$100 support remains alive and well, although bulls surely don’t want to see the IBB test it any longer. With a jump to $105, it looked like the IBB was snapping out of its sharp (albeit unsustainable at some point) downtrend resistance.
The move failed though, leaving the IBB in a “put up or shut up” scenario for the next session or two. Failure to push through puts $100 back on the table. If it gets through, it won’t be easy to push on, with the 50-day, 100-day and 200-day moving average all hovering above between $106.50 and $108.50. Further, another downtrend resistance line sits up near $109.
Bears can sell-short the IBB on a break below $100.
Keep an eye on Celgene Corporation (NASDAQ:CELG), Gilead Sciences, Inc. (NASDAQ:GILD), Amgen, Inc. (NASDAQ:AMGN) and Biogen Inc (NASDAQ:BIIB), as these four make up about 32% of the fund.
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After hitting $130 earlier this year, the thought of ever buying J M Smucker Co (NYSE:SJM) at $100 again seemed to require a miracle.
Turns out, we don’t need a miracle at all. We just need the $110 level to fail. Should it do so, there are no significant levels of support for SJM stock before that level.
I don’t know that SJM will break below $110, but should it do so, maybe bears will have something to snack on. Bulls who don’t want to wait for a possible (albeit still unlikely) retest of $100 can get long near current levels. A close below $110 could be a stop-loss, while a target of $130 could be the upside.
Roughly $16 per share in upside and $4 per share in downside — along with a 2.75% dividend yield, if that’s your thing — seems like an attractive risk/reward to me.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell held a long position in CELG and JPM.
