It looked like an ugly day brewing on Friday, but as we tiptoed into midday trading it was clear that the bears were lacking the necessary “oomph” to drive stocks lower. Bulls pushed the indices back to flat on the session and it sets up an interesting week provided there are no major headlines this weekend. Let’s look at a few top stock trades to watch early next week:
Because of the results and the big rally, it feels like profit-taking today. Importantly, shares are bouncing off the backside of prior downtrend resistance (black line). It would be encouraging to see EXPE consolidate north of this level before going on to take out Friday’s highs.
Below this mark and a test of its 200-day moving average is likely in store.
Electronic Arts (EA)
Shares are up 14% on Friday after a solid day on Thursday as well. Sometimes when the volatility is heavy, it’s best to stay on the sidelines. For traders that really like EA or traders who were in EA before this move, consider limiting your risk now.
A stop-loss near $93 — pre-earnings resistance and the 100-day moving average — would be prudent at this point. For those with more risk tolerance, I wouldn’t let this one get below $85.
Good call on this dip-buy, Luke Lango.
The move through $11 is notable and for investors who are long, may be a good stop-out point should CLF reverse course in the next few days. However, should it consolidate and begin to move higher, keep a few levels in mind.
The first is Friday’s high, near $12.40. The second is $13, a level where CLF stalled out near at the beginning of the fourth quarter. I would love to see $11 to $11.25 hold up as support and for CLF to push higher.
Our trade in Schlumberger (NYSE:SLB) was looking good too, but that proved to be a failure. Let’s hope Roku isn’t. A breakout over $48 and the 100-day moving average could easily send this high-octane name back to $50 or more.
But don’t be surprised if it treads around $45.
A break through resistance could push this back to its recent highs near $78 …
However, for ROKU, SQ and other longs to work, it will likely need the overall markets to hold up. Indices reversed off the lows on Friday and got back to near flat on the day.
In order for these names to work, bulls need to grab control next week.