After selling off in morning trade, U.S. stocks are trying buoy back in the afternoon session. So far, they’re doing a pretty good job of rallying off the lows. Let’s look at a few top stock trades to get a better idea of what’s going on under the surface.
Top Stock Trades for Tomorrow #1: Best Buy
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Shares of Best Buy (NYSE:BBY) are surging higher on Wednesday, up more than 16% after the company beat on fourth-quarter earnings and revenue expectations. Now what?
The stock’s massive move is impressive, but investors can’t give up their hard-earnings gains in this one. Short-term investors may consider booking some profits on this big-time breakout over $60.
Now up at $70, bulls who stay long may consider using the 200-day moving average or Wednesday’s low as their stop-loss. At the very least, I wouldn’t want to see BBY close below $66. This has been a key area over the past 12 months and a close below would signal an issue.
A move to the $75 area could be in the cards if Best Buy can digest this big rally and continue higher.
Top Stock Trades for Tomorrow #2: Campbell Soup
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After a top- and bottom-line earnings beat, shares of Campbell Soup (NYSE:CPB) are heating up, rallying 9% Wednesday. That’s giving investors something to smile about amid the stock’s multi-year rout.
Shares have been trapped in a nasty downtrend that’s still weighing on the stock price. At this point, downtrend resistance (blue line) and the 200-day moving average are working together against the bulls, making $37.25 a vital area for CPB. A close above that mark and it could put an end to the downtrend and trigger an even larger move. However, if CPB can’t get above this area, then the downtrend still has staying power.
Red flags will start to go up if CPB closes below the 50-day and 21-day moving averages. This puts the $32 support level back on the table and while it may not give way on the next test, it will deal another blow to CPB’s weakening chart and increase the odds of it failing in the future.
In short order: watch $37.25. If downtrend resistance keeps CPB in check, look to see how the 50-day holds as support. If it does, bulls may try to retest resistance down the road. Should it give way, the bears are still in control and will be gunning for a break of $32.
Top Stock Trades for Tomorrow #3: Advanced Micro Devices
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Ready for short and sweet? Advanced Micro Devices (NASDAQ:AMD) continues to move really well.
Shares are in a month-long uptrend, the 21-day moving average is support and $25 is resistance. Look for a retest of $25 and possible breakout above. Below uptrend support/21-day moving average and AMD needs to reset.
Top Stock Trades for Tomorrow #4: EOG Resources
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Moving higher on Wednesday is EOG Resources (NYSE:EOG), up over 3.5% despite the company missing on earnings. With shares rallying on what is a bad headline, that may bode well for bulls going forward. Especially with the tightening trading range that EOG is in.
Over $92.50 and bulls definitely have a case for being long EOG. If it can push through this $97.50 to $100 area, it could spark a larger move higher, perhaps to the 200-day at $111. If it falls below $92.50, bulls may want to clear out. EOG will then be below the 21-day and 50-day moving averages, its post-earnings low and uptrend support.
Top Stock Trades for Tomorrow #5: MercadoLibre
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Shares of MercadoLibre (NASDAQ:MELI) are surging on Wednesday, up 17.5% after the company beat on earnings and revenue expectations.
While off its highs a bit, the stock is still breaking out impressively on the day. At this point, I would love to see MELI consolidate over its prior highs near $415. If it can work off some of Wednesday’s big move and hold over this prior mark, it will paint quite the bullish picture.
It will also give bulls a very attractive risk/reward long setup.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMD.
