Stocks looked like they might be able to gain some momentum in early trading Wednesday, but those gains faded as investors clearly aren’t reaching for equities as they head into the third quarter. That’s left a number of interesting setups as we eye our top stock trades for Thursday.
Top Stock Trades for Tomorrow #1: Micron (MU)
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I wish I could say it was a surprise, but once again Micron Technology, Inc. (NASDAQ:MU) is finding itself lower despite reporting a solid earnings result earlier this month. Luckily, InvestorPlace readers already knew that was a likely reaction.
On the charts, we have a double top forming around the $64 level. For whatever reason, investors always seem to have one foot out the door on this volatile and low-valuation stock.
There’s no telling if $52 or the 100-day moving average will hold as support. However, there’s a decent one-year trend-line in place right now. That comes into play near $50.
The trading environment hasn’t been favoring names like MU, which is a bit daunting. But interested bulls can try a long trade near $50 should MU get there. It sets them up with a good risk/reward.
Top Stock Trades for Tomorrow #2: Chesapeake (CHK)
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Chesapeake Energy Corporation (NYSE:CHK) is another name that InvestorPlace readers should have been all over.
This stock hit new 52-week highs Wednesday despite the decline in U.S. equities. Support held at $4.25 and shares are now above the coveted $5 mark. You may also notice how CHK stock has “cooled down,” from its big run May — something we said needed to happen for new highs to come.
Now looking healthier and less overbought, it would be incredibly constructive for CHK to stay above $5.00 and at the very least, stay above $4.50.
Top Stock Trades for Tomorrow #3: Southwest (LUV)
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Southwest Airlines Co (NYSE:LUV) shares are still struggling to take flight. Despite its solid profitability and low valuation, LUV isn’t getting any…love. (Okay, sorry. I’ll show myself out, but hear me out first!)
Earlier this month, LUV broke out of its sickening downtrend, rallying toward $54 and failing. That’s because it hit a larger level of downtrend resistance. Sheesh, this just can’t catch a break. Now near $50 again, it’s at must-hold levels.
LUV is near the backside of its previous downtrend resistance line, a setup we normally love to buy as stocks retest their breakout level. However, there’s critical $50 support nearby and LUV isn’t looking too great.
If this level fails, LUV will fall into no man’s land, something bulls desperately don’t want to see.
Top Stock Trades for Tomorrow #4: Realty Income (O)
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Realty Income Corp (NYSE:O) — also known as The Monthly Dividend Company™ — is another REIT stock that’s on fire.
On Monday we highlighted the strength in Ventas, Inc. (NYSE:VTR) and on Tuesday we noted the breakout in Digital Realty Trust (NYSE:DLR). Now it’s time for O.
O has been slowly-but-surely rising from its February lows. However, up near $55 and this steady riser could hit some resistance. Investors need to watch for two things now.
The first is whether O can breakout over $55. If it can, get ready as the REIT space could gain some serious momentum. If it can’t, then plan No. 2 comes into play, which is for a pullback into trend-line support. Should it hold, O is a buy.
Top Stock Trades for Tomorrow #5: Blackstone (BX)
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It feels like Blackstone Group LP (NYSE:BX) has been trading for $32 for the entirety of its public life.
All three major moving averages are within about 30 cents of each other, between $31.94 and $32.25. With BX stock near $32, it should have some support. However, if the moving averages aren’t enough, long-term trend-line support sits just below.
Investors looking for a low-risk setup could consider buying BX and stopping out of the stock on a close below that trend-line. On the upside, they can target $33.50. Additionally, they could wait for a potential breakout over that mark too and buy that setup instead.
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 O.
