While the selloffs aren’t enormous, it’s clear that investors are getting defensive ahead of the Fed’s announcement on Wednesday. Amid the rate-cut drama is a plethora of earnings results. Let’s look at a few top stock trades.
Top Stock Trades for Tomorrow #1: Under Armour
Click to Enlarge
Under Armour (NYSE:UA, NYSE:UAA) stock is getting smacked on earnings, falling over 12% on the day. However, the stock is well off its session lows, as UAA stock bounces from its 200-day moving average and 50% retracement.
Now near $24, we find the stock at an interesting juncture. Either shares rally through the significant level of $25 or they fall below $22.
If it’s the former, it could trigger a rally up to the 50-day moving average at $25.74, and possibly fill the gap up to $27. If it’s the latter, it will lose the 200-day moving and 50% retracement. It could open up UAA to a drop to the 61.8% retracement at $20.80.
Top Stock Trades for Tomorrow #2: PepsiCo
Click to Enlarge
Presuming that the Fed follows through with a rate cut, it should be good news for equities. Stocks of all kinds — tech to dividend champions — should benefit, PepsiCo (NYSE:PEP) included.
However, the stock has been trading quite poorly as of late. Shares are struggling to reclaim the 50-day and 20-day moving averages, with the latter crossing below the former and signaling that short-term momentum is turning bearish. Downtrend resistance (blue line) is also forming a series of higher lows.
It gives bears a low-risk shorting opportunity.
If PEP closes over the $131.50 to $132 area, they can cover their positions. If PEP falls below $130, it opens up the stock to a test of its monthly lows near $128.40. Below that and it could trigger a fall down to the $124 to $125 area.
Top Stock Trades for Tomorrow #3: Invitae
Click to Enlarge
We’ve been talking about Invitae (NASDAQ:NVTA) all year long, from its breakout over $15 to the really bullish action throughout the last two months. Can it get to $100 like Citron suggests?
Now, shares are hitting new 52-week highs just over $27. If it breaks out, a run into the upper $20s and possibly up to $30 is possible. On the downside, I want to see $25 hold as support.
Top Stock Trades for Tomorrow #4: Capital One
Click to Enlarge
Capital One Financial (NYSE:COF) has been stuck at its lows all session, muddling about as its lower by more than 7% on the day as it discloses a big-time data breach.
The price action doesn’t bode well for a bounce, particularly as the charts get a bit sloppy from here.
$90 has proven significant over the past few years, while the 38.2% retracement for the one-year range is at $89.28. Below this area could trigger a move down to the 50-week moving average at $87.29.
The problem with COF stock? While $90 is propping it up, it’s below both uptrend support (blue line) and prior downtrend resistance (purple line). The latter has been present for years now, but gave way after last week’s massive rally.
I would not be a buyer of COF in the short-term unless it reclaims the 10-week moving average and prior downtrend resistance. There are better, more well-defined setups out there than CFO.
Top Stock Trades for Tomorrow #5: Pfizer
Click to Enlarge
Now this one’s a curveball. On Monday, Pfizer (NYSE:PFE) announced a merger deal with Mylan (NYSE:MYL), but only saw slight selling pressure on the day. While the selling did pick up into the close, not many were expecting a near-7% decline on Tuesday.
The move has PFE stock plunging through its 50-week moving average and well below its 10-week moving average. I don’t know if it will get there, but buying PFE at $37 seems somewhat interesting. It’ll give PFE a 3.9% dividend yield and bring it back to prior resistance. It will also give bulls a well-defined risk/reward.
Should Pfizer firm up before that, let’s see if it can reclaim $40 or if this mark acts as resistance.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long NVTA and short PEP.
