The stock market is slowly but surely pushing higher. It seems as though the bulls are reluctant to run too far, too fast. At the same time, the bears simply can’t garner any staying power when it comes to pushing this market lower. At least not while rate cuts are on the way. Let’s look at a few top stock trades for next week.
Top Stock Trades for Monday #1: Johnson & Johnson
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Shares of Johnson & Johnson (NYSE:JNJ) were smacked lower on Friday, falling over 4%. The stock is approaching the same level we flagged earlier in the year, near $130.
This level is currently acting as support, but has played a key role over the past 12 months. If JNJ stock falls down to this level, it may be worth investors nibbling at on the long side. Keep in mind, J&J reports earnings next week.
If it hold this mark on an earnings decline, that’s even better.
Top Stock Trades for Monday #2: Square
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We had Square (NYSE:SQ) on watch for a break higher, and that’s exactly what we’ve gotten this week. The stock is up big over the past four trading sessions, rallying over 10%.
For the short-term traders in this name, it would be prudent to book some of these gains with SQ stock heading straight into prior resistance.
From here, let’s see how SQ stock behaves. Does it pullback and consolidate a bit? Do shares push through resistance, which turns to support?
I would love to see SQ stock coil under this level for a few days while holding up above $80. A breakout could Square flying higher, but the more rest it has before the breakout, the more powerful the move can be. On a decline, see that $78 holds as support. If it doesn’t, $75 is on the table.
Top Stock Trades for Monday #3: Illumina
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It was a tough day to be a shareholder in Illumina (NASDAQ:ILMN). The stock plunged more than 15% after management warned about a big shortcoming in earnings.
The action on Thursday spoke clearly. However, investors used the pullback to the 21-day moving average as an opportunity to get long rather than an opportunity to exit the name once steep channel support gave way.
Given how big of a run ILMN has been on, you can’t blame dip-buyers too much on this one. One day later and the stock is down huge. Its inability to stay above the 200-day moving average near $317 or the 61.8% retracement near $311 doesn’t bode well for bulls. Under prior downtrend resistance (purple line) just adds salt to the wound.
The longer shares stay below $311, the worse off bulls are. Let’s give this one a few days to see where it settles down at. If it reclaims the $311 mark quickly, then we at least have a point of reference to use on the downside.
Top Stock Trades for Monday #4: Aurora Cannabis
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Yesterday we wrote about the bearish setup in Canopy Growth (NYSE:CGC) with its descending triangle formation. On Friday the stock plunged more than 7% and Aurora Cannabis (NYSE:ACB) isn’t doing much better, down more than 5%.
ACB is setting up the same descending triangle formation that CGC is and it’s playing out exactly the same. Below the $7 to $7.25 area is very troubling for ACB. A rally back to this area and a failure to reclaim it sets it up for more downside.
Be careful with this one. I wouldn’t touch this one on the long side with a chart like this.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
