U.S. equities continue to slowly-but-surely squeeze higher, even as resistance looms overhead. U.S.-China trade negotiations continue to improve and the Federal Reserve seems to be backing off its hawkish stance. This has given investors renewed hope, allowing stocks to rally. Let’s get a look at today’s top stock trades.
General Electric (GE)
Shares hit $6.66 in early December, but more importantly, didn’t retest those lows when the rest of the market hit its low on Dec. 24. GE then powered up and through the 21-day moving average and the $8 level. We highlighted $8 and the 50-day moving average previously and on Wednesday, we got a pullback to this level after a test of $9.
After a beautiful bounce, investors have to see how it does with $9 again. As you can see in November, GE got extra volatile once it fell below this mark (blue circle). If GE pulls back and holds $8 again, it’s a buy.
For now, though, I’m looking for another test of $9. Let’s see what happens if and when it does.
Skyworks Solutions (SWKS)
That’s right. That’s how you know the market was pricing in the absolute worst for SWKS and likely other suppliers as well. What do I want to see now? SWKS get back over the 10-week moving average and $70.
Maybe the stock has bottomed — and it has attractive fundamentals — but I want to be sure that the downside is over. Above $70 and SWKS has a better risk/reward setup.
The stock’s move over downtrend resistance and the 21-day moving average sparked a rally over the 50-day and up to $20. The question now is, will $20 and the 100-day moving average act as resistance?
It’s looking like it might, at least in the short-term. If Huya can keep pushing higher though, it may help spark a rally for other Chinese equities. My thoughts? IQiyi (NASDAQ:IQ) could be due for some upside momentum.
However, MU powered through this level while jumping higher by 7% on Wednesday. In doing so, the stock broke out over downtrend resistance (blue line) and is also testing a breakout over the 50-day moving average.
Will the move stick? That depends. But bulls have to see it hold up over downtrend resistance/$34 at this point. If it can, I have faith that the bottom is in. That said, we’re not overbought yet and even though shares are up big Wednesday, they could keep rallying.
I’m watching the $40 to $41 level should MU continue to move higher. This area was important in the second half of 2018, but also marks the 38.2% Fibonacci retracement level from the 2018 high-low range.
Energy ETF (XLE)
Aggressive bears can short the ETF now with a stop-loss on a close over $64. Conservative bears will wait for the ETF to breach $63 and possibly test $64 before taking a short position. Either way, $64-ish should be a tough level and offers a good risk/reward for bears.