We’re seeing similar action on Tuesday as we did on Monday. Major U.S. stock indices started off lower on the day, with bears unable to gain meaningful ground and bulls trying to bid stocks back up into positive territory. The best part of these kinds days is the ability to take measured risk/reward day trades. It also gives us a chance to find some top stock trades.
Top Stock Trades for Tomorrow #1: U.S. Steel
Shares of U.S. Steel (NYSE:X) are getting pummeled on Tuesday, down more than 9% on the day. It’s got shares breaking down from the 20-day moving average and really not having any support nearby to cling to.
The next spot to watch will be $17, just below the stock’s 52-week lows. If it gets there, investors need to see if this is a good level for a bounce or if X will continue even lower. On rallies, see how X handles the 20-day.
Top Stock Trades for Tomorrow #2: Canada Goose
It’s above short-term downtrend resistance, but still has plenty of resistance overhead. If it can get through the 20-day, a rally to the 50-day and perhaps $52 could be in the cards. Otherwise, investors have to start thinking about the downside.
Below $47.50 and $43 to $44 is on deck. Below that and the December lows could be next. GOOS is looking ugly right now until it can put in some higher lows and takeout some resistance levels.
Top Stock Trades for Tomorrow #3: Twitter
After nine straight up days, Twitter (NYSE:TWTR) stock is getting into some overhead resistance and the stock is technically overbought, albeit barely. The bottom line? This isn’t the time to initiate a long position, particularly with TWTR stock running right into range resistance.
This could always be “the time,” where Twitter stock breaks out. For me though, the risk/reward is simply not favorable. A pullback to $33-ish wouldn’t be unhealthy and I’m not risking $2+ a share without having an upside target while Twitter is teetering on resistance if I can nab a safer entry.
Bulls should wait for a buyable breakout trade or a pullback.
Top Stock Trades for Tomorrow #4: Micron
The lesson we applied with Twitter can be highlighted with Micron (NASDAQ:MU). Last Wednesday, it looked like Micron was about to breakout, only to fail at resistance and pullback.
Bulls who bought at $45 are underwater by almost $3.50 a share (an unrealized loss of 7.8%) all the while Micron still looks pretty healthy. At the time, I said some “caution may be warranted” and liked the idea of bulls buying on a test of the 50-day.
I still stand with that idea, looking to buy about $1 a share below this mark. More aggressive bulls may feel comfortable stepping in now, but for me and in this choppy market, I’d rather risk missing a trade than taking on additional risk.
Top Stock Trades for Tomorrow #5: Agilent Technology
Agilent Technologies (NYSE:A) continues to trade very well, with shares putting in a series of higher lows and running into resistance near its highs.