Merger Monday really made itself known this week. Comcast (NASDAQ:CMCSA) outbit Disney/Fox (NYSE:DIS) for the rest of Sky plc, Randgold (NYSE:GOLD) and is being bought by Barrick Gold (NYSE:ABX), Sirius XM Holdings (NASDAQ:SIRI) acquired Pandora (NYSE:P) for $3.5 billion and that’s not all of the weekend deals, surprisingly. Let’s look at our top stock trades to get a better idea, although we won’t look at all of these deals.
Top Stock Trades for Tomorrow #1: Pandora
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Shares of Pandora clearly aren’t buying the move, up just 2% near midday trading on Monday. However, it has less to do with disbelief and more likely has to do with the fact that this is an all-stock deal rather than a cash offer.
Still, based on today’s prices, it values P at $10.14 per share, almost a full $1 per share (about 10%) above current levels. Should investors buy?
Now investors know what P’s upside is, provided it doesn’t receive another offer. But even that is sort of a moving target. I hate to say technicals go out the window, but a big driver will be how SIRI trades as well, given the stock-for-stock deal. After a clean rejection from $10.50 today, P is clinging to uptrend support (blue line).
I wouldn’t want to see it lose this level if I was a recent long.
Top Stock Trades for Tomorrow #2: Comcast
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The markets saw an interesting auction over the weekend, with Comcast ultimately edging out Fox (which is being purchased by Disney) for the remainder of Sky that Fox doesn’t already own — it has a 39% stake.
Like I said, interesting.
Anyway, the deal is a massive one, totaling more than $48 billion (inclusive of debt). That’s got CMCSA stock down more than 7% Monday and crushing its recent uptrend. The stock found support just below $35, a level that eager buyers can use as their stop-loss if they opt for a fresh long position.
Now below all three major moving averages, I want to see how CMCSA shapes up after this big deal. Aggressive bulls have their setup, while conservative buyers could wait for a larger correction down to ~$33.
Top Stock Trades for Tomorrow #3: Adobe
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Adobe Systems (NASDAQ:ADBE) has been an excellent trend stock for 2018 and ADBE just reported a great quarterly result. Shares initially popped but have been pressured lately. So what now?
There are various uptrend support lines we could draw, but I found them unnecessary. The one that I did draw has been the most recently relevant of them all, although that’s not to say the others won’t matter on a further correction.
In any regard, we saw early selling pressure in ADBE on Monday, which hit its 50-day and reversed higher. It advanced past Friday’s low and could mark a short-term bottom.
The thing I like about this setup? It’s low-risk setup. Below the 50-day and investors can bail. Should it hold and we push above the 20-day, channel resistance near $275 could be in the cards.
Top Stock Trades for Tomorrow #4: General Electric
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Another good risk/reward trade was General Electric (NYSE:GE). Shares peeked out over resistance and got back above prior significant support at $12.50.
We said this “loser” could be bottoming, but we were skeptical and said to keep a close eye on the levels we just mentioned. That setup failed and GE shares are now plunging below $12 to new multi-year lows.
That makes GE a screaming “no-touch” right now as it darts into no man’s land. If anything, investors can try a short position in GE should it rebound back to downtrend resistance.
Top Stock Trades for Tomorrow #5: Snap
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Snap (NYSE:SNAP) is teaming up with Amazon (NASDAQ:AMZN) to allow for direct shopping on its app, so shares must be rallying through the roof. Right?
Wrong.
The stock initially popped on the news but is otherwise back to flat on the day. While there’s still a few hours to go before the close, the initial reaction was quite poor.
Snap is one we’ve been directly avoiding for a while now and I wouldn’t put on a new long based on the reaction so far. Traders with a long position may consider selling on a close below $9, which could plunge Snap back down to its prior lows.
Should it rally, see how it handles the 20-day and 50-day moving averages, prior support at $10.50 and various downtrend resistance levels. (Do you see why I don’t like Snap?) There’s just too many negatives to like it for more than a bounce and even that seems sketchy right now.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long ADBE.
