Every few hours we get a new headline on the trade-war situation with China. While President Trump seems just fine with slapping on more tariffs, the two sides are apparently moving toward a solution. That’s got investors cautiously optimistic as we look at our top stock trades for Wednesday.
Top Stock Trades for Tomorrow #1: Salesforce.com
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Salesforce (NYSE:CRM) will report earnings after the close. This name has been crushed from its highs north of $160. Last week we said investors could buy a gap-down to the $117 area and look for a rally back into the mid-$120s.
While it was a scary time to dip our toes in the water, we’ve since seen a quick snap-back with shares now near $127 ahead of earnings.
Now I want to see the post-earnings reaction. My gut tells me the quarter will be fine, but that doesn’t mean the stock will rally. Investors are very skeptical right now and won’t hesitate to sell this one lower if they have any doubt. (Here’s an earnings preview.)
In any regard, on a decline, we need to see the $115 level hold up. On a rally, I want to see how CRM handles this $132.50 to $135 area.
Top Stock Trades for Tomorrow #2: Advanced Micro Devices
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Advanced Micro Devices (NASDAQ:AMD) had a good day Tuesday, rallying over 4%. The move broke shares out over downtrend resistance (blue line), a significant development given that it’s been in place for two months.
Further, last week’s deep secured a higher low, showing the slowly-but-surely bullish construction that’s underway. That can be seen on the chart with AMD’s shallow uptrend (black line).
Back below downtrend resistance and investors can stop-out of the trade. If AMD can push through this month’s highs near $22, a test of the $23 to $24 level is in the cards.
Top Stock Trades for Tomorrow #3: Starbucks
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Another name looking constructive? Starbucks (NASDAQ:SBUX). After a big rally, the stock has pulled back perfectly to its 21-day moving average. Plus that $65 level is holding up nicely.
While some investors may be nervous to go long now, they can use a tight-stop loss with a close below the 21-day. With a measured risk/reward, it seems like a reasonable trade.
Top Stock Trades for Tomorrow #4: Twitter
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Shares of Twitter (NYSE:TWTR) are coiling in a tight range, putting in a series of higher lows and lower highs. Twitter’s above the 50-day and below the 100-day and 200-day moving averages.
Which way will it break?
It’s hard to say, but investors can certainly trade the ranges. If Twitter fails to break out, bears can likely push it back down into the low-$30s, while a breakout can push TWTR stock to the $35 to $36 level. If bulls don’t want to buy a breakout, they can buy a pullback, provided shares fall to and find support near $31.
Top Stock Trades for Tomorrow #5: Papa John’s
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With a few good-looking setups above, why would anyone want to take a bite out of Papa John’s (NYSE:PZZA) after Tuesday’s ~14% beating.
While just below $50 now, shares knifed right through $52.50. These two levels were vital between May and July. Shares are also below uptrend support (black line).
Further, the 50-day moving average has played a significant role as both resistance and support over the past year. Blowing right through this level (as well as the 200-day moving average) today and PZZA looks quite unattractive.
If PZZA can stabilize and consolidate above the 100-day moving average this week, then maybe bulls can justify a long position. But it’s not one for me. Keep in mind, this stock was at $40 just a months ago.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long CRM and SBUX.
