Talk about a lot of action! Between auto sales numbers, Apple’s (NASDAQ:AAPL) guidance and the $74 billion deal between Celgene (NASDAQ:CELG) and Bristol-Myers Squibb (NYSE:BMY), we’ve got more must-see stock charts than we know what to do with. Since the move already happened in CELG-BMY, let’s look at some others that are on the move, starting with one of the biggest of them all.
Top Stock Trades for Tomorrow #1: Apple
Click to Enlarge Obviously the big one here is Apple, which slashed its first-quarter guidance from $89 billion to $94 billion down to $84 billion. While the move is disappointing, there are still a lot of positives from the quarter.
In response, the stock is down almost 10% Thursday to $143. Apple stock is now down 38.9% from its highs, so I’m surprised more of this news isn’t already priced in. Let’s not forget Apple trades at 11 times earnings, has a $100 billion buyback, a 2% dividend yield, a fortress balance and top and bottom line growth.
Anyway, what do the charts say? With the $140 level looking somewhat significant and the 200-week moving average just below, some may think the ~41% peak-to-trough pullback might be enough to slow Apple’s selling.
However, keep in mind Apple reports earnings on January 29th and we could very well see this stock come down into the report. If that’s the case, $140 may not hold up and a drop down to ~$120 could be in the cards. Tim Cook already said this quarter would be a record for earnings, so we know it won’t be worse than last year’s Q1 results.
Meaning that, at the very worst we’re still looking at just under $12 in earnings over the past 12 months. If we use a trailing P/E ratio of 10 for Apple, that gets us to $120. That 10 P/E ratio isn’t pulled out of thin air either, it’s the bottom of the P/E range for Apple over the last decade.
Top Stock Trades for Tomorrow #2: Apple Fallout for Broadcom
With its drop down to the mid-$230s, AVGO is coming into moving average support, but I wouldn’t be willing to risk much on this level holding. Should it fail, AVGO could easily be headed to the $220 level.
Down there, it’s attractive. At 10 times earnings, a ~4.75% dividend yield and after a promising quarter, I don’t want to be too bearish. But investors have realize this stock was at $200 during the summer and in this tape, revisiting that level isn’t out of the question.
Top Stock Trades for Tomorrow #3: Skyworks Solutions
The stock is putting in an ugly candle on the four-year weekly chart and it has zilch in the way of support right now. We could easily see this name wash out down to $55, regardless of its low valuation.
$55 is a good target on the downside and a spot that bulls can take a low-risk shot at. If it fails though, look out.
Top Stock Trades for Tomorrow #4: Advanced Micro Devices
Click to Enlarge Advanced Micro Devices (NASDAQ:AMD) has been trying, but it’s just not gaining any upside traction. Maybe that’s on the back of the Apple news, perhaps it’s because it has so much revenue tied to China. Could it be both?
The “why” doesn’t really matter right now. What does matter is that the stock is down almost 10% on Thursday as its moving averages and trends continue to squeeze it lower. $16 has been holding up, but I’m feeling less and less encouraged by the day.
If this level gives way, $14 to $15 is the next line in the sand. If that can’t support AMD — and after its last earnings report along with Nvidia’s (NASDAQ:NVDA), there’s no guarantee it will — then the $12 to $13 level could be next. That’s the backside of prior downtrend resistance.
Top Stock Trades for Tomorrow #5: General Motors
Click to EnlargeWe can’t talk just about Apple today, so let’s look at General Motors (NYSE:GM) too. Unit sales for the quarter fell 2.7% year-over-year and 1.3% for the year. It was a down year, but not unexpected. Apple’s warning on China — GM’s largest market — perhaps provided some extra concern, helping to push GM down by 4% on the day.
Let’s also not forget that the S&P 500 fell by over 2% on the day.
Anyway, GM continues to ride its downtrend resistance mark lower and lower. It’s now resting on the 200-week moving average, a level that has been support over the past few years, but provided little help for GM back in October.
With the current environment, I wouldn’t be surprised to see GM retest the $30 level in the next few weeks. If it sells off into earnings, it may provide a worthwhile opportunity for bulls. But if the U.S. and China are slowing, GM’s not the one investors will want to hide out in.