The stock market was angry on Monday, sending tech stocks spiraling lower and putting a significant dent in the S&P 500 and Dow Jones. It’s leaving many investors wondering whether we’re going to retest the October lows or whether buyers will step in to buoy the markets. Of note, we have five top stock trades to watch to start the week.
Top Stock Trades for Tomorrow #1: Apple
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At one point today, Apple (NASDAQ:AAPL) was down about 5%. We don’t have enough room to get into an entire discussion on Apple, but it appears traders are reacting to supply headlines out of Asia, while investors are still troubled by Apple removing unit volumes from the quarterly reports.
We outlined the pre-earnings strategy earlier this month, saying that a move below prior channel resistance (blue line) could push Apple down to the 200-day. On a test of this $190 level, we would be buyers, although surely everyone is looking at the 200-day.
It makes me wonder two things: Will Apple test it and if so, will it hold? I could see the test driving it below the 200-day, simply because so many investors are watching this mark. At the same time, I could see it not even getting there for the same reason. So that will be an interesting development this week.
As it stands though, Apple is an excellent company and there are various support levels between $188 and $192. For that reason, I would nibble some stock for a long-term position in that range.
Top Stock Trades for Tomorrow #2: Goldman Sachs
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Man, what happened to Goldman Sachs (NYSE:GS)? Shares have tanked about 12% over the last few sessions, as the stock teeters on vital support.
Below $210 and I don’t really care for GS, as it’s now poked below the 2017 lows. Maybe GS finds support nearby or down near $200, but I would wait for a rebound over $210 before going long. Otherwise, it could be like catching a falling knife.
Top Stock Trades for Tomorrow #3: General Electric
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Speaking of falling knives, General Electric (NYSE:GE) has been nothing short of a disaster. After JPMorgan analyst Stephen Tusa slapped a $6 price target on GE stock last week, the selling has been aggressive.
Right now GE stock is no man’s land. Just like we’ve said for almost a year now, we can’t buy this name blindly. Investors arguing that there is only so much downside also said that in the $20s, the teens and at $10. Notably, just a few weeks ago, we said GE is in trouble if it loses $10.
I don’t know where this name bottoms. In the short-term, the selling is likely overdone. But I don’t know when the bounce will come, how strong it will be or how long it will last. For that reason, I’m still on the sidelines.
Top Stock Trades for Tomorrow #4: Advanced Micro Devices
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At one point, shares of Advanced Micro Devices (NASDAQ:AMD) were down more than 10% Monday. Clearly the 21-day moving average is acting as resistance, as is the $22 level.
So now what?
Let’s see if we get a retest of the 200-day moving average and/or the $17 level. Investors can go long at that level with a stop-loss just below the October lows.
Top Stock Trades for Tomorrow #5: Home Depot
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Earlier on Monday we sized up Home Depot (NYSE:HD) ahead of earnings, although that was before the stock fell 3%. The company will report on Tuesday before the open.
With earnings on tap, investors should play the reaction, rather than take a stab ahead of the results. Should HD stock decline post-earnings, look to see if support in the low-$170s holds up.
If it rallies, look to see if Home Depot can close above $190 and the 200-day moving average. Further, also see how it handles the $197.50 level and the 50-day moving average. If HD stock can hurdle either of these levels and close above them, look for them to act as support going forward.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
