U.S. stocks jumped higher Monday on news that trade tensions between China and the U.S. are cooling off. Can stocks continue higher this week? Here are our top stock trades for Tuesday.
Top Stock Trades for Tomorrow #1: Celgene (CELG)
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What’s going on with Celgene Corporation (NASDAQ:CELG)? The once gold standard in biotech continues with the beatdowns, now down almost 30% on the year and nearly 50% from its highs.
At this point, CELG stock is simply a falling knife. Once the $95 level gave way it’s been like an avalanche lower. The hope for bulls now is that support comes into play somewhere between $70 and $75. For bears, I’m not sure what the target is anymore, now that CELG stock trades with a single-digit P/E ratio despite double-digit earnings and revenue growth.
The only catalyst for bulls aside from CELG’s growth and valuation is more of a question than a statement: just how much lower can CELG really go?
Top Stock Trades for Tomorrow #2: World Wrestling (WWE)
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World Wrestling Entertainment, Inc. (NYSE:WWE) has been in Hulk mode over the past year, tripling over the past 12 months.
Now sporting an RSI reading — which measures how overbought or oversold a stock is — of 94 out of 100 suggests investors shouldn’t buy this name now. Not after a move like this.
While it may seem like a no-brainer short, these big-runners don’t tend to treat bears very well aside from a temporary fall. If you’re too tempted to short — which I’m not — don’t overstay your welcome. Remember, WWE was overbought before Monday’s 14% rally, too.
Sometimes the best trades are ones you watch from the sidelines.
Top Stock Trades for Tomorrow #3: Snap (SNAP)
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Snap Inc (NYSE:SNAP) has two things going for it from a stock perspective. First, the momentum-measuring MACD reading (in yellow) could be bottoming and second, the $10.50 low has held twice.
But unfortunately, that doesn’t make Snap a buy.
Twitter Inc (NYSE:TWTR) and Facebook Inc (NASDAQ:FB) are better from a technical and fundamental perspective. Plus, as long as Snap is under $11.50, any upside will be limited. Shorts can use a close over this level as a stop-loss and look for a break of $10.50 support.
Bulls can do the opposite and buy on a close over $11.50 if they really want to be in this name (again, I do not).
Top Stock Trades for Tomorrow #4: Smuckers (SJM)
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J M Smucker Co (NYSE:SJM) is getting close to a 3% yield, where it may attract some income-seeking investors. But unfortunately, the consumer packaged goods space is under pressure. Maybe that’s from rising bond yields or perhaps it’s because of sector rotation or less-than-stellar earnings.
Whatever it is, it’s got best-of-breed PepsiCo, Inc. (NYSE:PEP) singing the blues too.
As for SJM, earlier this month we said:
“After hitting $130 earlier this year, the thought of ever buying 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 [$100].”
$108’s only purpose seems to be delaying the drop down to $106, which itself is only delaying more downside. The truth is, SJM’s stuck in a downward channel. It may take a lot of patience and it may never get there, but my $100 buy order is standing by.
Top Stock Trades for Tomorrow #5: Netflix (NFLX)
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Which way is this one going to break? When it comes to Netflix, Inc. (NASDAQ:NFLX) it’d be downright foolish to bet that this chart will break lower rather than higher.
That doesn’t mean you have to buy, but don’t gift your money away by shorting NFLX at this point. A break up to the $340 level will fuel NFLX’s run even higher as the stock is currently resting for its next big move. Watch for a close over resistance as the spark.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell miserably held a long position in CELG.
