Stocks took a breather on Monday as investors digest potentially negative trade-war news. However, we’re far from a panic at this point. Let’s look at a few top stock trades to kick off the week.
Top Stock Trades for Tomorrow No. 1: Nvidia (NVDA)
We had to zoom out 14 months to capture some of the collapse in Nvidia (NASDAQ:NVDA) stock from 2018’s fourth quarter. Slowly but surely the chip giant has been climbing out of a tough hole.
After falling slightly on Friday after reporting earnings, it looked like NVDA might pullback to the 50-day moving average. However, Monday’s rebound has longs thinking of buying a breakout rather than buying the dip.
If shares can push over short-term resistance (around $212.50) then a move to $220-plus could be in store. It would put the 38.2% retracement level near $227.50 on the table, which would fill the gap from last year’s breakdown.
If $212.50 holds as resistance, see that the 20-day moving average buoys the name.
Top Stock Trades for Tomorrow No. 2: iShares Russell 2000 ETF (IWM)
The S&P 500, Dow Jones Industrial Average and Nasdaq Composite have all gone on to hit new all-time highs. However, the Russell 2000 has yet to do so and in fact, remains notably below its former highs.
Investors can see that the iShares Russell 2000 ETF (NYSEARCA:IWM) still remains relatively range-bound between $145 and $159. Remember, we flagged the test of range support in October, which gave bulls a dip-buying opportunity.
Now, they need to see the recent consolidation in the IWM (blue lines) resolve higher. If small-cap stocks start to play ball, stock market bulls can really gain momentum.
For that to happen we’ll need to see a move over $160.50 in the IWM. That could get a move up toward $167.50 going. If resistance holds steady or the IWM resolves lower, see if its major moving averages can support the name between $153 and $154.
Top Stock Trades for Tomorrow No. 3: Xerox (XRX)
HP (NYSE:HPQ) turned down the offer from Xerox (NYSE:XRX) to be acquired, although this story is far from over.
Both stocks continue to trade okay, particularly XRX near its highs. The key now is to see the stock hold up above $36. This is the prior high from July, but more importantly, was the “take-off” level earlier this month once all this M&A news got underway.
Below $36 and $34 could be on the table, and possibly lower. Unless some big news sends it over, trend-line resistance (blue line) should keep a lid on XRX. Keep in mind, with much of this news being M&A related, the charts are prone to big gaps, both up and down.
Top Stock Trades for Tomorrow No. 4: Roku (ROKU)
Roku (NASDAQ:ROKU) has been unstoppable. Anyone who bought on the initial post-earnings dip has seen a rally of $40 or more in just a few days. Shares are now north of $160, a level that it has had trouble sustaining in the past.
From here, it can go one of two ways. Either shares continue to push higher and hurdle $170, or $160 fails and puts $150 back on the table as possible support. Keep in mind that, technically speaking, Roku stock isn’t overbought yet.
That doesn’t mean it will keep rallying, just that it can keep going higher if bulls push it. Investors have to start thinking about how many stops are parked above $170 and what could happen in the event of a short squeeze. Again, that’s not a guarantee, but it’s something to think about.
Top Stock Trades for Tomorrow No. 5: Intelsat (I)
When I pulled up the chart for Intelsat (NYSE:I) on Monday, shares were down big, at $10. Just a few hours later and the stock is down even more, now near $8.
At the time, the only support level I could find was at $7.50, still notably far from $10. Near that level now and I don’t know that I have the confidence to call this one a buy.
Given the volatility, it would be best to either watch this one from the sidelines or give it a few days to settle down. Below $7.50 and $6 or lower could be here in a hurry. If $7 support holds, a rebound to the 200-week could be in store, up near $11. Use caution.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long ROKU and NVDA.
