After an ugly open, stocks were able to fight their way higher and actually turn positive later in the day. Some are talking about a temporary bottom now, as the S&P 500 sits near the lower end of its recent range. Others stock leaders have been holding up a bit better than the overall market, which is encouraging. Let’s take a look at our top stock trades for Tuesday.
Top Stock Trades for Tomorrow #1: General Electric
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Shares of General Electric (NYSE:GE) aren’t showing any reversal signs yet, with the stock hitting a new low in Monday’s session. This time, the stock broke below $7. It’s getting close to the $5 and $6 price targets of Wall Street’s longest running (and most accurate) GE bears.
The question is whether GE goes lower from there or stops somewhere in between. I still don’t like GE until its stock becomes more constructive. In fact, here’s exactly what I’m looking for.
There are surely investors looking to bottom fish this one, as its share price continues to dwindle. When everyone was talking about this one bottoming near $10, we said to avoid if it dips below. $9.99 or worse would be bad news and that’s played out.
Eventually GE will be a buy, but my hard-earned dollars aren’t wading until the coast clears up some more. Stay diligent, especially in this market.
Top Stock Trades for Tomorrow #2: Bank of America
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We haven’t talked about good old Bank of America (NYSE:BAC) for a while. With BAC’s slide into no man’s land on Monday though, it’s on the radar.
I flipped through multiple charts and not may are saying good things. If we go back to the election in November 2016 and draw some Fibonacci lines, we can say BofA is bumping into its 61.8% retracement — my favorite — after its post-election run and consolidation. But that feels too cherry-picked to me.
Instead, I’m looking at the short-term charts. As much as I like BAC from a fundamental perspective, its charts are lacking. Through all the selling, BAC has been holding up well above this downtrend support line. Until Monday that is.
On a rebound, look to see if Bank of America can get above this level. If not, short-term traders may consider shorting this and looking for a retest of Monday’s lows.
Top Stock Trades for Tomorrow #3: Amazon
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Amazon (NASDAQ:AMZN) is doing its best to push higher Monday and overall, has held up better than the indices over the past few sessions. I would love to see this $1,600 level hold and for AMZN to put in a higher low (blue circles).
My issue with Amazon is how long it’s been hanging out below its 200-day. With the 200-day and 50-day now near the same level, it may be hard for AMZN to break out above these levels.
If so, it has to get through $1,775 too, a level that’s stopped Amazon’s rally twice now in the last month.
Top Stock Trades for Tomorrow #4: Alphabet
Another member of FANG, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), shares are holding up well on the backside of downtrend resistance. GOOGL was a good buy off the $1,040 level and for those comfortable with a wider stop-loss, still presents a good opportunity with long-term support nearby.
Further, those looking to nibble GOOGL at various levels, perhaps near current prices is appropriate. Its fundamentals are great and I would love another chance near $1,010.
On a rally, look to see if downtrend resistance (purple line) and/or the 200-day moving average again act as resistance.
Top Stock Trades for Tomorrow #5: Weibo
Weibo (NASDAQ:WB) is one we pointed out at the end of November. Since then, shares have been holding up pretty well.
It’s hard to see the 50-day moving average, as downtrend resistance (black line) covers it up so well. Effectively though, WB continues to stay above these two marks — albeit barely. That’s a great sign for investors.
With WB stock above $60 as well, bulls have a low-risk long opportunity on their hands. If WB stock breaks below support and falls back below prior resistance, bears have a low-risk short opportunity as well. Watch this one closely.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMZN and GOOGL.
