Stocks slipped slightly on Monday as investors work off some of Friday’s jobs report rally and as trade-war headlines continue to pop up. Let’s look at a few top stock trades as we kick off the week.
Top Stock Trades for Tomorrow No. 1: Chewy (CHWY)
Chewy (NYSE:CHWY) is set to report earnings after the close Monday, as are our Top Trades No. 2 and 3.
Over the last few trading sessions, CHWY stock has fought hard to break out over downtrend resistance (blue line). To its credit, Chewy stock has done a good job holding up over this mark, although it struggled in Monday’s session.
After the company reports after the close, it’s vital that the stock doesn’t go on to make new lows below $21.68. If it does, it puts $20 — and possibly the teens — on the table. Ideally though, CHWY will hold up over the 20-day moving average at $23.57, as well as downtrend resistance.
On the upside, let’s see if CHWY can clear some of the clutter near current levels. Specifically, let’s see if it can clear the 50-day moving average and the $25 level. Above that puts the 78.6% retracement just below $26 on the table. Moving above all of these levels puts the declining 100-day moving average near $28 on the table.
Top Stock Trades for Tomorrow No. 2: Toll Brothers (TOL)
I have routinely highlighted Toll Brothers (NYSE:TOL) as a relative strength leader. The stock has a pattern of ripping to new highs, consolidating its gains and rallying to new highs again.
Can it do it again on earnings?
TOL stock is trying to break out over the $41.50 level. See if it can get above and more importantly, stay above this level after its post-earnings reaction. If it can, a breakout maybe in the making.
On a decline, see where support comes into play. Can TOL hold its 20-day and 50-day moving averages near $40? How about uptrend support (blue line) near $39.50? Falling below the pattern puts $38.50 on the table. Below that and the 200-day moving average is possible.
Top Stock Trades for Tomorrow No. 3: Stitch Fix (SFIX)
Stitch Fix (NASDAQ:SFIX) shares made an impressive move Monday, breaking out over $24. Of course, the whole move could be for naught, depending on the post-earnings reaction.
On a pullback, it would be ideal for SFIX stock to hold this $24 breakout level as support. But given SFIX’s history of volatility, that’s also unlikely. So on the downside, let’s see if $22 can hold as support. There it has short-term uptrend support (blue line), as well as the 100-day moving average. Further, its 50-day moving average sits at $22.28. Below this area could put $18 on the table.
On the upside, let’s see if SFIX can reclaim its 50% retracement near $26.90. Above that puts the 61.8% retracement on the table.
Top Stock Trades for Tomorrow No. 4: Bluebird bio (BLUE)
It has been a tough run for bluebird bio (NASDAQ:BLUE), as highlighted by Monday’s 2.7% decline. In late November, BLUE broke out over downtrend resistance (blue line), but found $85 and the 50-day moving average to be resistance.
After Monday’s pullback, the backside of that downtrend mark buoyed the share price. For bulls, the setup is now simple.
On the downside, prior downtrend resistance and the $72 level have to hold as support. On the upside, bulls need to reclaim $85 and the 50-day moving average.
Top Stock Trades for Tomorrow No. 5: Shopify (SHOP)
Shopify (NASDAQ:SHOP) has been getting a lot of attention lately and deservedly so.
Again, keep this one as simple as you can. Recent resistance has come into play at $375. Above it opens the door to $400. At the same time, recent support has come into play near $360. Below it puts $340 on the table. Below that and the 50-day moving average will be key.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
