Investors were given a relatively calm day on Wall Street, which ironically only draws more anxieties and questions over what’s to come during the week’s next three sessions. I don’t normally like to cover stocks in back-to-back top stock trades, but Tuesday’s action practically demands it.
Top Stock Trades for Tomorrow #1: General Electric (Update)
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On Monday we outlined how to trade General Electric (NYSE:GE). On the upside, we said GE needed to clear downtrend resistance first and foremost. Since it failed to do so, we said taking out the lows could cause a drop to $10.
With Tuesday’s 10.5% drop, that’s exactly what we have after GE reported third-quarter results and slashed its dividend. So what now?
GE really hasn’t spent much time below $10 and teetering near the level now, bulls should do their best not to let it get too far below this mark. I would love to read an update from JPMorgan analyst Stephen Tusa on GE, given that this guy has completely nailed the decline.
On the short-term chart above, there’s still obvious downtrend support. For this decimation to end, bulls need to get the stock over this mark, as well as the most recent level of support, which came near $11.25.
On the long-term chart below, it’s hard to believe we’ll get to $8, but then again, getting to $10 didn’t seem possible earlier this year either. Below that blue box of support, it’s hard to have much love for GE on the long side. Give it a few days to shake out.
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Top Stock Trades for Tomorrow #2: Under Armour (Update)
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Unlike GE, we don’t need a ton of explainer here for Under Armour (NYSE:UA, NYSE:UAA). On Monday, we thought we were being greedy asking for a move over all three major moving averages and downtrend support. But with UAA’s 26% post-earnings rally, that’s exactly what we got.
$24 is a reasonable upside target now, particularly with how well the retail sector is (surprisingly) doing right now. However, should a pullback commence, look to see how UAA does at the 100-day near $21 and on the backside of downtrend resistance. That’s a pullback I want to buy, should support hold.
Top Stock Trades for Tomorrow #3: BP
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BP plc (NYSE:BP) also reported earnings on Tuesday. Despite the seemingly good results, the stock did not react that bullishly, up just over 2%.
Using the weekly chart above, we can see that BP is struggling to close over the 50-week moving average. This mark has actually been support for several years and it would be quite a bit more bullish if it could end this week above the mark.
Perhaps the 10-week moving average will act as resistance, but the longer it sits below the 50-week mark, the less constructive the action is. On a slight pullback though, BP could find some uptrend support (blue line) and level support between $38 and $39.
Bulls could do worse than a buy a dip to this area, provided it holds.
Top Stock Trades for Tomorrow #4: Facebook
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Earlier this week when we previewed Facebook (NASDAQ:FB) earnings, we used a daily chart to show possible support and resistance levels. I wish Facebook would have sold off hard into earnings, as that would have made it a far easier setup. This chop-and-rally action makes it much tougher. Particularly with Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) all struggling on earnings.
So where to now?
The 10-week moving average is obvious resistance and we’ve seen similar resistance issues on the daily chart (linked above). FB needs to clear these levels to put its decline to rest. On the downside, look to see if the 200-week moving average near $133 acts as support.
If so, investors have a solid risk/reward setup. If it fails, $120 could be in the cards.
Top Stock Trades for Tomorrow #5: Walmart
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If you were to buy most stocks on October 9th, you would have lost money. That is, unless that stock was Walmart (NYSE:WMT).
Over the past year, this defensive giant has struggled over the $100 level. Short-term investors can use this mark as their stop-loss. However, if the momentum continues, look for a retest of the highs near $108. On the downside, I would love a retest of the mid-$90s. That draws in uptrend support, the backside of downtrend resistance (blue line) and the 50-day moving average.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long GOOGL.
