The markets went through a volatile spurt in the early parts of Wednesday’s trading session. However, things mellowed out a bit going into the close. Here are our top stock trades as a result.
Top Stock Trades for Tomorrow #1: Apple
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I think we have to start with Apple (NASDAQ:AAPL), as America’s first $1 trillion market cap company announced a new round of iPhones, Watches and functions on Wednesday.
The markets aren’t reacting too kindly so far, with shares down about 1%. It’s not that the products aren’t great (they are) or that consumers won’t buy them (they will), but the stock was pretty hot heading into the event. InvestorPlace readers knew to temper down their expectations at $230.
Now cooling, it will important to see whether Apple can stay above its 20-day. If not, a decline to 50-day may be in store.
Top Stock Trades for Tomorrow #2: AT&T
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I was a big-time buyer of AT&T (NYSE:T) around its most recent earnings report with shares near $30. The yield was simply too high — near 6.5% — and historically speaking, not sustainable.
AT&T either needed to cut the dividend or the stock needed to rally. Given that AT&T is a dividend champion, not only paying out its dividend but raising it annually for more than three decades, the former seemed out as an option.
That only left a stock rally as the other choice.
However, near $33.50 and shares may need to take a break. Not only is T nearing an overbought condition, but it’s also running right into the 200-day moving average.
It’s possible that it pushes through and continues higher. But investors should realize that there are likely better buying options ahead. Short-term bulls can consider locking in some profit, or if they’re like me and have a good cost basis with a solid yield, may consider selling covered calls and/or entering a collar trade if they’re fluent in options trading.
Top Stock Trades for Tomorrow #3: iQiyi
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“The Netflix (NASDAQ:NFLX) of China” has been pretty quiet lately, but iQiyi (NASDAQ:IQ) looks like it’s starting to wake up.
I flagged this name on Twitter earlier Wednesday and it’s beginning to look quite positive. Wednesday’s 7% rally is pushing IQ through its 20-day and 100-day moving averages. It’s also on the backside of prior downtrend resistance (blue line). The question now is, can it continue? For IQ, over $26 and it looks solid.
One key will be how Chinese stocks trade as a group. Let’s see if it can get to the 50-day and how it handles it from there. Watch out for any trade talk between the U.S. and China, too.
Top Stock Trades for Tomorrow #4: Micron
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Ouch, Micron (NASDAQ:MU) has been buried lately. A downgrade from Goldman Sachs isn’t helping matters either, as shares fell 4.5% in response.
Is the run over?
Maybe. But from a fundamental perspective, it’s hard to hate a company too much when it trades at roughly 3.5 times earnings. No, that’s not a typo.
This might be one of the cheapest yet profitable stocks I’ve ever seen. That said, it’s charts look terrible. There should be strong support in the upper-$30s, which Micron may see if selling pressure accelerates into earnings on September 20th.
Use caution when trading this name, and as we always say with Micron, know your levels.
Top Stock Trades for Tomorrow #5: Goldman Sachs
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What’s up with Goldman Sachs (NYSE:GS) right now? Shares are down 11 straight days and have been beaten to a pulp. While others like JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC) haven’t exactly been brag-worthy lately, GS has been downright putrid.
While next year’s growth numbers aren’t great, they’re still positive, which has to mean something for a stock that trades at sub-10 times earnings and pays a 1.4% dividend yield.
Bulls looking for a low-risk entry might have it now that Goldman has fallen almost 20 straight points from where was in late-August. $225 may be a decent spot to try a new long position, while those same bulls could stop-out of their position on a weak close below uptrend support (in blue).
The preferred setup? An open at or below $225 before reversing and closing higher on Thursday or Friday.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long JPM, BAC and IQ.
