Global stock markets are still trading violently but the U.S. equities are still battling close to the all-time highs. So the upside potential is still viable. Wednesday we saw strong earnings reports. This confirm that there are still stock trades to hunt in spite of the geopolitical risks and rhetoric.
Our five stock trade to watch for Thursday include: Walmart (NYSE:WMT), Lowe’s (NYSE:LOW), Alibaba (NYSE:BABA), Xilinx (NASDAQ:XLNX), and Bitcoin
Top Stock Trades for Tomorrow No. 1: WMT
WMT stock is near all time highs and for good reason. The company has taken the fight to Amazon (NASDAQ:AMZN) head on and it’s doing well against this formidable opponent.
Investors loved the earnings report last week and WMT stock rallied 8% on the headline. From here, there could be better entry points for the short term. WMT stock is vulnerable to fade and a retest of $110 per share. Maybe even fill the gap $2 lower. But for the long term, this company will continue to deliver and adapt to the market demands. If I am long WMT already, then I stay long. Otherwise I would buy the dips for the long term.
Wednesday, Target (NYSE:TGT) stock soared as they reported a strong quarter. This confirms the strength of the U.S. consumer spending and operational success. Both companies are winners because of strong execution. WMT is employing technology trend to better compete with AMZN one to one and beat it.
Top Stock Trades for Tomorrow No. 2: LOW
LOW stock spiked today after a strong earnings report. The investor expectations were tepid going into the event so it made for an easy hurdle. This however is not the time to pile into LOW stock and chase this rally.
The reason the expectations were low is because it has a long history of trailing its competition Home Depot (NASDAQ:HD). I believe this continues until we get several reports to prove otherwise. Case in point, HD stock is up 26% year-to-date which 60% better than LOW. This is also true for the last five year stats.
So if I took in profits from the LOW stock reaction to earnings, I would book it for now. From here, it carries the risk of a fade to fill the gap below especially if markets in general correct. This is not the same as shorting the stock.
So if I want to remain constructive on the segment, I would rotate my risk into HD stock instead. This one is sitting at another breakout line. Even though the LOW report shows domestic comparable sales beat those of HD, over the long term HD stock has performed better thanks to more consistent management execution.
Top Stock Trades for Tomorrow No. 3: BABA
BABA stock has an interesting setup brewing. It will be tough to trigger but the reward if they do so is great. If the BABA stock bulls can break above $180, they can target $192 per share or higher. It won’t be easy and there will be resistance at the neckline and at $185.
For a while, BABA stock has been lurking just under this breakout level and doing it from higher lows. But this is a steep rising wedge which leaves the stock vulnerable to pullbacks. If the general markets cooperate then BABA will make this happen; it’s a matter of time.
This would then fill an old gap and also places it at a was prior fail. The interesting part is that was also a neckline that if bulls can break could carry it to $200 per share or higher.
On pullbacks, BABA stock could fade to $170 which is just above its yearly point of control where bulls and bears loved to fight.
Top Stock Trades for Tomorrow No. 4: XLNX
XLNX stock is no stranger to headlines. The whole chip sector has been in the line of fire in the economic war between the US and China. XLNX stock moves more on headlines extrinsic to its own execution than not.
But Tuesday XLNX fell on headlines of possible “unpatchable” security flaw in its equipment. So this is a rare dump from intrinsic problems. Nevertheless, this dip places XLNX sock at a place with it makes sense that it mounts a rally soon.
XLNX stock bulls defended the $100 mark hard on the May correction and yesterday’s scare didn’t even come near it. So as long as the support band below holds, it is likely that XLNX makes another run at $120 per share. There will be resistance at $109 and $113, but if the general markets rally then XLNX can slice through them and reach it major accident scene from the end of July.
Top Stock Trades for Tomorrow No. 5: Bitcoin
Since the love-fest with bitcoin of 2017 the interest in the digital coin has not abated. While it’s not hogging the headline it is still a hot debate. Skepticism is high so Bitcoin has a questionable reputation on main street and Wall Street.
Both extremes are wrong when it comes to bitcoin. It has value because people say so. This is no different than gold. Bitcoin and gold are rare and people want them so they will continue to be valuable on that assumption. Critics say that it’s used for illicit activities and to that I say that so is cash. At least with bitcoin, they always leave an electronic trace. Furthermore, FIAT cash only has value because the people say so. So in essence cash and bitcoin are more similar than we think.
What’s the best place to buy bitcoin? This depends on time frame. If I am buying it like gold as a long term investment then timing really doesn’t matter much. But there are clues on the charts to offer some guidance. Bitcoin price here is falling into support. So in theory it should bounce back up to 10,200. But it moves so fast that by the time you read this note, the landscape would have probably change a lot.
So, it’s best to get the general feel for the zones that matter and know what’s at stake. For that here is a free video from this week that does a great job of that. It sheds light on what’s in store for Bitcoin price.
Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here.
