U.S. stocks again moved higher on Tuesday as investors continue to bid up equities. After taking a look at some of today’s movers, here are our top stock trades for Wednesday.
Top Stock Trades for Tomorrow #1: PepsiCo (PEP)
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Shares of PepsiCo (NYSE:PEP) have been on pure caffeine since we flagged it down in May, where it was near long-term support. On Tuesday, it’s rallying about 4% after a solid earnings report.
Since then it’s been slowly grinding higher and for your benefit, we have included both the long-term chart (above) and the short-term chart (below).
As you can see on the top chart, $95 is a very solid level of support. However, it would be very bearish for PEP stock to breakdown and retest this mark now. In both charts, you can see how PEP pushed through its downtrend resistance mark (purple line).
The $107 level is also marked on each chart, as is the $115 level. In short, we are looking for potential support now at $107 and potential resistance up near $115.
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Top Stock Trades for Tomorrow #2: Tesla (TSLA)
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There aren’t many days where Tesla (NASDAQ:TSLA) isn’t in the headlines. Tuesday wasn’t any different, with Tesla announcing it will build another Gigafactory in Shanghai. The news has shares moving higher.
As we can see on the chart, $360 resistance held strong. After Tesla initially broke through downtrend resistance (purple line), Tesla temporarily found the backside of this level as support. Once that failed though, it was back down to the $300 to $310 level, where Tesla found long-time support. A new trend-line of support also emerged, as Tesla has put in a series of higher lows since April.
Phew! Sorry for the brief history lesson there, but I really wanted to highlight how technically-driven Tesla stock tends to be. So what now?
Tesla is again finding resistance from that purple downtrend line. From here, one of two things will eventually have to happen: Either that downtrend line will gave way, in which case $360 is back on the table. Should it hold as resistance though, not only is the $300 to $310 support box back in question, but so too is Tesla’s newly formed trend-line of support.
Since these support and resistance lines are both trending toward each other, one will eventually have to fail. Let’s see which one it will be.
Top Stock Trades for Tomorrow #3: Caterpillar (CAT)
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Caterpillar Inc. (NYSE:CAT) has become rangebound between $135 and $160. I’m curious to see whether the ~$141 level will act as resistance, given that it was support several times this year.
I would also worry about CAT’s three major moving averages, with the 50-day, 100-day and 200-day moving average all resting between $146.50 and $149.50. They could act as resistance if $141 isn’t enough to curb the bulls.
That said, the MACD is turning bullish (green circle). So what should investors do?
Conservative bulls may wait for a possible pullback into $135. Should it hold, they can go long. Aggressive bulls can buy now and try for a longer term swing to see if CAT retest its range resistance up near $160.
Top Stock Trades for Tomorrow #4: Nvidia (NVDA)
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Nvidia Corporation (NASDAQ:NVDA) has been surprisingly quiet this year.
Shares have been slowly but surely churning higher, as seen by Nvidia’s trend lines. The stock is making solid progress by pushing through that $250-ish area which held NVDA in check for several months.
Long-term bulls should feel confident holding a long position in Nvidia so long as trend-line support holds up and as long as NVDA is above the 200-day moving average.
It’s highly likely NVDA will retest its highs at some point this year and by the looks of things, it might not be too far off.
Top Stock Trades for Tomorrow #5: Alcoa (AA)
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Alcoa Corp (NYSE:AA) is one investors may want to avoid, at least when talking about the stock charts.
Support down near $44 is pretty evident, but resistance is near $50. All three major moving averages are also just above AA. The 50-day, 100-day and 200-day moving averages are within about 60 cents of each other and could act as resistance as well.
If investors don’t want to short AA that’s fine. But they should at least think twice before buying it right here. I’d rather buy on a move over $50 or a pullback down toward $44, than buy AA stock right here.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long NVDA.
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