The S&P 500 is flirting with new all-time highs. The recent rally has been fast, and some names have done better than others. Today’s top stock trades center around the banks.
Top Stock Trades for Tomorrow #1: iShares TLT Bond ETF
No one seems to care about the buybacks, dividends and low valuations from the banks. But one big driver has been rates, and thus, bonds. So let’s look at the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) first.
The TLT has demanded plenty of traders’ attention since the beginning of August. That’s when bonds began to explode higher to the upside, rallying from $132 to $148 in just a few weeks.
The ETF twice topped out in the $148+ area, and has now retreated in five of the past six sessions. Investors who are looking for a long trade in TLT may consider buying on a test of the 50-day moving average. That’s a reasonable risk/reward area with $137.50 just below.
Notice how the recent decline in TLT has helped pave the way for a run higher in the banks? If you’re not trading TLT, that’s great, but consider keeping the ETF up on the monitor for a clue on what’s going on with the banks.
Top Stock Trades for Tomorrow #2: Bank of America
Remember a few weeks ago when we flagged the long trade in Bank of America (NYSE:BAC)? We liked this setup because of the reasonable risk/reward BAC stock was presenting buyers, as it bobbed near range support between $26 and $26.50.
Now pushing toward $30, longs are likely considering booking some profits near current levels. I want to see if BAC stock can press into range resistance between $30.50 and $31.
Top Stock Trades for Tomorrow #3: Citigroup
Citigroup (NYSE:C) has a very similar setup, bouncing off $61 range support and now trying to hurdle $70. If it can, it puts a retest of $72 on the table, with a possible run up to trend resistance (blue line).
On the downside, longs will want to see the 50-day moving average hold as support.
Top Stock Trades for Tomorrow #4: JPMorgan
Like the two previous banks, JPMorgan (NYSE:JPM) held range support near $104. However, this one has a lot more “oomph” than the two above.
Shares are already over $116 range resistance and making new highs. I’d love to see JPM continue higher, turning trend resistance (blue line) into trend support.
At the very least though, see that $116 holds as support from here. Below could usher in a flush down to the 50-day moving average.
Remember, as hot as some of these banks have been, they are still coming into or are near key resistance levels. In the past, these levels have held them in check, even when the news has been bullish. So stay disciplined, don’t be greedy and let price guide your decision making — not your bias! Resistance will either break and lead to higher prices or hold steady and send stocks lower.
Top Stock Trades for Tomorrow #5: Goldman Sachs
Goldman Sachs (NYSE:GS) has really struggled, but man has this one been strong over the past few days.
Over $221 and a continuation rally can take hold. However, if it rejects GS, look to see how it responds to a test of the 50-day. If it attracts buyers, another $220 test is in the cards. If it fails as support or has a tepid response, uptrend support (purple line) could be in the cards.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long BAC and C.
