A late-afternoon bounce in U.S. equities helped lift investors’ spirits, but doubts still linger as key indices hang near their 200-day moving averages and as tech continues to struggle ahead of earnings season. Here are our top stock trades to start the week.
Top Stock Trades for Tomorrow #1: Bank of America
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A top and bottom line beat doesn’t get you very much. Investors saw that on Friday from JPMorgan (NYSE:JPM) and again on Monday from Bank of America (NYSE:BAC).
Bank of America fell several percent before rebounding toward flat in Monday’s session. The great thing about many of these banks? The risk/reward.
Buyers can step into BAC stock knowing that a close below $27 can be their stop-loss. With earnings off the table, we have less headline risk to worry about and a rebound up to the $29.50 to $30 area is on the table.
Traders got a chance to buy at $27.65 today, and if they’re frequent users of Twitter, I had a callout for them.
Top Stock Trades for Tomorrow #2: Charles Schwab
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Like BAC, Charles Schwab (NYSE:SCHW) also reported earnings. However, unlike BAC, SCHW does not have as good of a setup.
SCHW stock rallied to and failed to get above prior support at $49. It’s now clinging to its February low at $48. Curious bulls can take a flyer on this with a tight stop if they want, but I’d rather buy this on a close over support, which is now shaping up as a resistance.
Top Stock Trades for Tomorrow #3: Goldman Sachs
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Sticking with bank earnings, Goldman Sachs (NYSE:GS) will report its quarterly results on Tuesday before the open. Currently, shares are bumbling around the bottom of its trading range near $215.
So far, we’ve seen a mixed reaction to bank earnings, but the volatility has been pretty low. Up or down a few percent is nothing to get to worked up over and it’s likely we’ll see a similar move out of GS.
If bulls want to go long, keep in mind that a close below $210 would thrust the stock into no man’s land.
Top Stock Trades for Tomorrow #4: Johnson & Johnson
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Sharing the spotlight on Tuesday morning with Goldman Sachs will be the quarterly report from Johnson & Johnson (NYSE:JNJ).
The market ruined the excellent, albeit unsustainable uptrend for JNJ (blue line), as shares have now fallen about $10 per share from the recent highs. As long as JNJ stays over this line-in-the-sand at $132, bulls can stay long.
For those with a longer term outlook, over the $130 level and JNJ still looks constructive. On a rally, see how JNJ handles that $136 to $137 level, where the 20-day and 50-day moving averages currently rest.
Top Stock Trades for Tomorrow #5: Activision Blizzard
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No earnings for Activision Blizzard (NASDAQ:ATVI), but the company did release its flagship Call of Duty video game this weekend. Shares popped on Friday and pooped on Monday, falling about 2% to the end day. What now?
Bulls can stay bullish so long as ATVI stays above trend and the 200-day moving average. It’s great seeing ATVI fight to stay above the 50-day and it puts the top of its channel range back in play, currently up in the mid-$80s.
Of course, the broader market will need to play a role in it getting there, but crazier things have happened. On the downside, a break below the 200-day moving average could get ATVI down to that $66 to $67 level, but also remember that it does chop around the 200-day from time to time. Unless markets are really dicey and if bulls are more long-term than short-term, I would use a looser stop-loss than 200-day as a result.
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 JNJ.
