After a positive trading session on Monday for Wall Street, the threat of headlines remain. Last week, the sentiment went too bearish and was an opportunity to go long many great companies whose stocks were unduly punished. Here are a few tickers to watch going into tomorrow.
Top Stock Trades for Tomorrow: TLT
Last week, investors piled into the U.S. bonds and the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) spiked to new highs. But late in the week, the opportunity came from the sentiment in that trade; it went too bearish.
The risk is now not that the TLT stock is too expensive, but the opportunity that originates from the recklessness of last week’s trade. There was widespread consensus that U.S. bonds will continue to rally with absolute certainty. This is never correct, because if there was no risk then there should be no return.
So the right trade was to short the TLT on Thursday when that rhetoric was prevalent. This opportunity is still there because the TLT left a lot of froth from its latest rip and can fill the gap to $136. The bet is that the TLT bulls became too complacent.
Top Stock Trades for Tomorrow: GLD
Similar to the TLT, investors piled into the precious metals like silver and gold so the bulls there also became too complacent. The SPDR Gold Shares (NYSEARCA:GLD) is now overextended but this is not a call on the value of GLD. This is merely to say that too much love on the name right now.
So again the trade was to start shorting the GLD stock last week. But on Monday we saw a continuation of the weakness so the trade is still on. Much like the TLT, GLD also left a lot of recent froth that could come out of the chart quickly.
But since both the TLT and GLD trades are similar, I don’t want to do both at the same time. Especially, if I am already long the equities in general.
Top Stock Trades for Tomorrow No. 3: UBER
Lyft (NASDAQ:LYFT) lock-up expires by tomorrow. But the better trade is to be long Uber (NYSE:UBER) for the next few years. The concept actually started last week. For all those who missed the IPO, the lows of last week were an opportunity to take another flyer on long bet on UBER stock.
The thesis for that is not short term, however. This is a company that has the opportunity to be like Amazon (NASDAQ:AMZN), which started its life as a book seller but now dominates several industries.
UBER also started by moving people but now has several verticals already going and many more in potential. UBER freight is a leading candidate to become a cash cow. While mainstream investors criticize their profitability, they are missing the potential. Growth companies are supposed to spend a lot to grow a lot. Sure, UBER losses are massive but so are their addressable markets so it is unavoidable.
Top Stock Trades for Tomorrow No. 4: AAPL
There is no doubt that Apple (NASDAQ:AAPL) has been the poster child of company success. Yet, AAPL stock never gets all the respect it deserves. AAPL is almost never a momentum stock like AMZN but there could be a move coming.
In the next few days, I would watch for the break above the $218 per share neckline. This has been a cement wall of late and for good reason. $220 is the yearly point of control so the bulls and bears like to fight it out there and create congestion.
So, if and once the AAPL bulls break above it then they will overshoot. Apple stock can then target $230 per share or higher.
I know it sounds ridiculous but the charts paint a clear picture of the potential. So it’s best to set sentiment aside and treat the opportunity with technical spin rather than emotional.
Top Stock Trades for Tomorrow No. 5: AMD
Advanced Micro Devices (NASDAQ:AMD) has been the chip stock champion. But one can make the argument that it’s the overall tech champ. At one time this honor went to Nvidia (NASDAQ:NVDA) but no longer. Somehow AMD stock finished last year up 50% while the stock market was falling off a cliff.
Here, AMD stock is again showing signs of a breakout. But since we are still in a headline trading mode, I cannot trust the politicians not to foil this potential as well. So patience will be a virtue and there are definitely important lines in the AMD short term chart to heed.
While Monday the stock is up 2%, AMD is heading into a resistance zone. Onus is on the bulls to prove that they can reclaim it as footing. If so then the eventual upside target $37 per share of higher, but it won’t be easy.
Conversely, there are holes in the chart below and these gaps can exert downside pressure. Luckily, there is the short-term point-of-control zone around 29.5 that will lend support. Losing $28 would bring a bearish scenario but one I don’t think will come alone. Meaning, if the markets hold this most recent bottom, then AMD lows are set for now.
So I’d rather sell puts below than chase upside above while markets battle the headlines. For example I could have collected over $1.50 per contract for selling $26 November AMD puts.