What a surge we got in the stock market today, with the S&P 500 taking out its prior record closing from 2018. Same for the Nasdaq. As nice as it is to see stocks moving higher, it does create a less attractive risk/reward for new longs. Let’s see what top stock trades we can find as earnings continue to roll in.
Twitter (NYSE:TWTR) is perhaps the most notable mover on the day. See to it that the stock now stays over former resistance, which was laid out the other day. I would also like to see it stay over its key Fibonacci retracement levels now.
Top Stock Trades for Tomorrow #1: Procter & Gamble
This is how you know Procter & Gamble (NYSE:PG) came into the print too hot. The company beat on earnings and revenue estimates and bumped its full-year outlook. Still, shares fell 3.2% on Tuesday.
The decline drops PG out of its rising channel and puts downside targets back on the table. Given how strong the stock has been and given that its report was more a sell-the-news event rather than panic on poor results, the first spot to look is the 50-day moving average.
Should $100 to $101 fail to buoy PG, a decline into the mid-$90s is possible before buyers step in. I want to see where support comes in, and what happens on the ensuing rebound.
Top Stock Trades for Tomorrow #2: Kohl’s
$80-ish is pretty clear resistance for the stock, which is erupting off uptrend support while the 20-week is crossing above the 50-week moving average. The latter development could signal a shift into bulls’ favor as far as long-term momentum goes.
However, in the intermediate term, I want to see how KSS does with uptrend resistance and the $80 level. A push through could create a new leg higher. A rejection provides a buy-the-dip opportunity.
Top Stock Trades for Tomorrow #3: Roku
Shares of Roku (NASDAQ:ROKU) are popping nicely on Tuesday, up about 8% following a bullish analyst note.
The stock is gapping up through the 20-day and 50-day moving average, a rally that’s threatened to stall if shares pullback over the next session or two. However, I have my eyes on a larger level, that being downtrend resistance currently near $67.50.
Should it get there, I expect Roku to run into some sellers. If a pullback ensues, see where the buyers step back in. Should we get a decline back to downtrend support and the 200-day, Roku is worth a shot on the long side, at least for a bounce.
This one has been struggling, so it has to prove that momentum is back to trust it on the long side.
Top Stock Trades for Tomorrow #4: Small Caps
With FAANG names roaring back, small caps may not be the main focus right now. However, the direction of the IWM has been a leading indicator at times.
The good news for bulls is that iShares Russell 2000 ETF (NYSEARCA:IWM) is up 1.6% on Tuesday and outpacing all other indices. That said, it has some catching up to do.
I loved the little pullback we got last week, with three straight declines, the last two of which tested down into moving average support and bounce to close basically flat each day. With the 20-day, 50-day and 200-day all just below the current price and resistance sitting at current levels, the strong rally in the IWM looks great.
Should it breakout over this level, the IWM has room to run. While the S&P 500, Nasdaq and Dow are all hovering near their highs, the IWM could still run another $12 and not hit them. I really like a breakout over $158. Below last week’s lows near $154.75 and I’d change my thesis.
Top Stock Trades for Tomorrow #5: Johnson & Johnson
When Johnson & Johnson (NYSE:JNJ) reported earnings last week, the stock flirted with a big move over $140. However, that rally faded intraday, with JNJ closing near $138. That showed that JNJ was not yet ready for the breakout, although stalling at $140 should be no surprise. Ahead of the event, we wrote, “$140 is clearly short-term resistance.”
A pullback into the 20-day and 50-day moving average held, meaning JNJ had reset enough to warrant another look. Now here we are at $140 again, with JNJ stock threatening to move even higher. A close over $140 has me interested on the long side.
Below the 50-day and I’ll lose my interest. Above $140 opens the door to $146+ going forward.