The stock market again took a break from its robust rally as it digests more earnings results. We’ve seen plenty of mixed results, but so far, the market is handling the news pretty well. Here are a few top stock trades to watch going into the last trading day of the week.
Top Stock Trades for Tomorrow #1: IBM
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International Business Machines (NYSE:IBM) started off lower on the day, but climbed more than 4.5% later in the day after reporting its earnings results.
Last week, IBM stock pushed over downtrend resistance (blue line) and this week’s move cements it. That prior downtrend mark is now a must-hold level for investors. I would love to see IBM stock stay above the trio of candlesticks that marked the weekly closing highs for the past 52 weeks. That’s the black line that comes into play near $146.
If it holds, shares could run into the mid- to high-$150s and possibly challenge the 2018 highs. Below the ~$146 mark and we’ll need to see if the 10-week moving average holds as support.
Top Stock Trades for Tomorrow #2: Honeywell
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Look at the beautiful “inside day” Honeywell (NYSE:HON) is printing after reporting its quarterly results and raising guidance. An inside day occurs when the entire range of the second day is “inside” the range of the prior trading session.
Of course, this one is even more interesting as HON stock initially lost, then reclaimed the 50-day on Thursday, but couldn’t get above the 21-day moving average.
Hmm. This sets up a range trade.
Below Wednesday’s lows and HON is likely heading lower. Above Wednesday’s highs — remember, that’s the prior session — and HON is likely heading higher. At least, until it runs into potential downtrend resistance (blue line).
Top Stock Trades for Tomorrow #3: Philip Morris
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Philip Morris (NYSE:PM) stock erupted 9% after better-than-expected earnings results. The move on the weekly chart thrust the stock above a key downtrend level, as well as the $87 mark.
As long as PM holds above $87, bulls can justify a long position. Below it and we’ll need to see the 200-week moving average hold as support. On the upside, let’s see if PM can push through Thursday’s highs and $90.
Top Stock Trades for Tomorrow #4: Morgan Stanley
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Morgan Stanley (NYSE:MS) caught a slight lift after reporting second-quarter earnings. The stock continues to put in a series of higher lows and is maintaining above all of its major moving averages.
However, it’s having trouble pushing through resistance between $44 and $45. Like most major bank stocks, resistance continues to keep these names in check.
Over $45 and a move to $46.50 is possible. Above that and $49 is doable. On a pullback, see that $43 holds as support. Below is concerning.
Top Stock Trades for Tomorrow #5: Bank of America
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Another example of a bank stock struggling to breakout? Bank of America (NYSE:BAC).
The stock flirted with a breakout over $29.50 on Wednesday after beating on earnings expectations. However, the stock gave up most of its gains going into the close before holding short-term support at $29.
BAC stock is stuck in a very tight range between $29 and $29.50. However, it’s got plenty of bullish catalysts working in its favor, including earnings growth, revenue growth and a continually rising dividend and buyback. Its valuation continues to drop, too.
If it can push through $29.50, it could trigger a breakout, first to $30 and possibly up toward $30.75. A move below the 21-day moving average and $29 is concerning.
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.
