Building off of Friday’s gains thanks to the better-than-expected May jobs report, U.S. stocks again rallied on Monday. Despite the broad gains, there are some cautious setups in our top stock trades for Tuesday.
Top Stock Trades for Tomorrow #1: General Electric (GE)
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We’ve been cautious about a “false bottom” in General Electric Company (NYSE:GE) for months now. Admittedly though, we took a low-risk stab at GE as it broke over $15.
That trade didn’t last long though and we were stopped out as GE tumbled lower and lower. On Monday, JPMorgan bear Stephen Tusa said GE would need raise $40 billion to bring its leverage in line with its peers.
Ouch.
Shares are now breaking below the $14 level, which is another bearish development. If ~$13.40 doesn’t hold up — which is the backside of its previous resistance channel — then a retest of its lows is certainly possible.
Top Stock Trades for Tomorrow #2: Advanced Micro Devices (AMD)
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Advanced Micro Devices, Inc. (NASDAQ:AMD) has been nothing short of amazing over the past two months.
We hopped on the bull train with shares below $10 and after getting through some choppiness, we’ve quickly found AMD knocking on the door of $15. That included a powerful push through downtrend resistance (purple line).
We want to see AMD stock eventually breakout over $15. But with an RSI reading (blue circle) of 82, shares are temporarily overbought and bulls have to be getting tired. Heck, it’s up more than 60% from its April lows!
The more prudent strategy would be to wait for a pullback in AMD. A great case for the bulls would be a pullback from this $15 resistance level until it finds support near $13.50. That would give AMD the rest it needs and recharge it for another run at $15.
Top Stock Trades for Tomorrow #3: Tesla (TSLA)
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That $275 level continues to hold up for Tesla Inc (NASDAQ:TSLA) as bulls are rallying on three things: Tesla’s potential in China, increasing Model 3 production and the massive 31% short interest.
I have generally been constructive on Tesla above $300 and less so below $300. Over $300 and TSLA needs to prove it can clear $310, then bulls can get revved up on the name from a trading perspective. Shares are over downtrend resistance, but are currently struggling with $300. That $300 to $310 range is important to me because that’s where many shorts may start to cover, which could get a short-squeeze going.
Traders like to use round, easy numbers and as a result it’s where a lot of traders place their orders. So shorts may have stop-losses between $300 to $310 and then up at the 200-day moving average. All of those buy-to-cover stops could act as gasoline on the fire should bulls seize the momentum.
Bulls should be concerned on a close below $275.
Top Stock Trades for Tomorrow #4: First Solar (FSLR)
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Man, $75 has been a tough nut to crack for First Solar, Inc. (NASDAQ:FSLR). On Monday shares tumbled over 6% thanks to new restrictions out of China.
FSLR did more than fall though, it plunged right through its 200-day moving average and went right through trend-line support. It’s never constructive to see such a swift move through support — unless you’re short, of course.
FSLR bulls need its 2018 lows near $60 to hold up, otherwise there’s no definitive level of support nearby. FSLR could find itself in no man’s land if $60 doesn’t hold.
Top Stock Trades for Tomorrow #5: Sogou (SOGO)
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All the talk may be about iQiyi, Inc (NASDAQ:IQ) and it should be! Shares have been on fire and InvestorPlace readers can seek comfort in the fact some bought at $20.50.
As great as IQ is, it’s not the only Chinese stock worth investors’ attention. Sogou Inc (NYSE:SOGO) is also worth looking at.
This Chinese search engine has plenty of cash, no debt and lots of growth. And now, it’s stock is trading well. After pricing its IPO at $13, SOGO stock went tumbling. After breaking through downtrend resistance, shares consolidated near $9.50 before exploding 13% on Monday.
See how the name handles the $11 next. if it breaks through, target No. 2 is in its sights.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long IQ and SOGO.
