Where do we even start? A new NAFTA deal with the U.S. and Canada allowed U.S. equities to spike on Monday, but there are other big stories to get to as part of our top stock trades. Let’s not waste any time.
Top Stock Trades for Tomorrow #1: General Electric
Shares of General Electric (NYSE:GE) surged on Monday as the company announced it would replace current CEO John Flannery with former Danaher (NYSE:DHR) CEO Larry Culp.
The news sent shares to one-month highs, just over $13, before GE hit its 100-day moving average and pulled back significantly. So what now?
General Electric took a huge $23 billion write-down, announcing it at the same time as its CEO change. Management also said it wouldn’t hit its earnings or free-cash flow guidance, the latter of which remains a serious concern for the company’s dividend, and didn’t provide an update.
Earnings are due up in a few weeks and there’s going to be a lot of info in there for investors to digest. Could it be a big rally on poor results, possibly signaling a bottom in the name? We’ll see.
For now though, we need shares to stay above this downtrend mark, which has plagued GE all year. If it can stay above this mark and consolidate/drift higher, it will do wonders for bulls’ confidence. A break below though will mean that, technically speaking, nothing is new with GE.
Top Stock Trades for Tomorrow #2: Tesla
On Friday, Tesla (NASDAQ:TSLA) stock plunged 14% on a news of an SEC lawsuit against chairman and CEO Elon Musk. That prompted us to take a look at the stock — obviously! — where we highlighted the 200-week moving average as key support.
On Monday though, shares surged almost 17% on news that Musk settled with the SEC and will relinquish his role as chairman for at least three years, but gets to remain on as CEO.
Bulls really want to see TSLA stay above $300. It has found the confluence of the 50-day, 100-day and 200-day moving averages as intense resistance, with a prior downtrend line looming just above all three moving averages.
Quite honestly, so long as TSLA is below this mark it can remain pretty choppy. I would like Tesla a lot more on a close over this $315 to $320 area.
Top Stock Trades for Tomorrow #3: Small Caps
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While the Dow and S&P 500 enjoyed nice gains on Monday, the iShares Russell 2000 ETF (NYSEARCA:IWM) slumped 1.5% and closed near its lows. That’s odd, right?
We’ve got a lot going on here. First, uptrend support (black line) gave way on Monday, as IWM is testing the bottom of its short-term down channel (blue lines). For now, the 50-day is acting as resistance, while the 20-day exponential moving average is threatening to cross below the 50-day moving average, another intermediate term bearish development.
Should the bottom of this fall out, look for long-term support near the 200-day. I would love for a temporary failure of the 200-day and a retest of this $159 to $160 breakout level. That would be a great buying opportunity for bulls with an excellent risk/reward.
Top Stock Trades for Tomorrow #4: Nvidia
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For the year, shares of Nvidia (NASDAQ:NVDA) have been quietly churning higher. However, the last few days have been explosive as NVDA hit new all-time highs on Monday.
The trading in NVDA has been pretty choppy this year, but has favored the upside. Now hitting the top of its recent resistance trend, it will be interesting to see how Nvidia proceeds. This trend has held Nvidia in check all year, but shares are not yet overbought and Monday’s move was pretty explosive. If shares continue to move higher and/or consolidate above this mark, it may become a new level of uptrend support.
We saw a similar move in Apple (NASDAQ:AAPL) a few months ago, which led to some-20% gains in a month. Short-term buyers will want to see $285 hold as support. A close below could signal that this trend is still resistance.
Top Stock Trades for Tomorrow #5: Canopy Growth
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Unlike the craziness of Tilray (NASDAQ:TLRY) and other pot stocks, Canopy Growth Corp (NYSE:CGC) continues to trade relatively well. Don’t forget, this is the company that Constellation Brands (NYSE:STZ) made a massive, multi-billion investment in.
So far, the 20-day exponential moving average is holding up as support, as CGC puts together a consolidation wedge (blue lines). A break below wedge support and 20-ema would be bad news and suggest further downside is ahead. In that case, $40 could be next.
Below there and ~$37 could be support, a prior breakout mark and possibly where the 100-day moving average (not shown) could come into play. Above $52.50 and $55 is in target. Above that mark and channel resistance and the highs could be next.
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 and AAPL.
