2019 was a banner year, as we saw record high after record high. What drove the indices higher? Let’s look the top stock trades from 2019, and specifically, the top five performers from the Dow.
Top Stock Trades for Tomorrow No. 1: United Technologies (UTX)
United Technologies (NYSE:UTX) was the fifth-best performer in the group, up 41% in 2019. After struggling with the $142 area in late October, UTX gapped up over this mark in November.
Later in the month, it actually pulled back and retested this former resistance levels. This time, though, it acted as support, a clear sign that bulls were in control. Unlike some of the stronger performers on the list below, UTX does not have as well-defined of an uptrend.
Notably, though, buyers have been stepping in around the 50-day moving average, giving bulls one significant point of reference. With shares above $150 — resistance in November and support in December — it’s hard to be bearish on UTX, which hit a new high on Thursday.
Below the 50-day could send it back down to range support around $142.
Top Stock Trades for Tomorrow No. 2: Visa (V)
Up 42% in 2019, Visa (NYSE:V) just barely nudged out UTX for No. 4 on the list. Unlike the rest of the market, Visa didn’t begin barreling higher until just a few weeks ago.
After hitting a high of $183.50 in July, Visa slowly but surely plowed higher. In November and early December, it had a solid uptrend guiding it higher (blue line), before erupting over $184, then $186.
It’s now in a steeper uptrend channel (purple lines) and continues to climb. Surprisingly, shares are not overbought like many others, so buyers could continue to push this name higher.
At this point, I would not bet against Visa if the stock is above the 20-day moving average. Below puts uptrend support, $184 and the 50-day moving average on the table.
Top Stock Trades for Tomorrow No. 3: JPMorgan (JPM)
Just one percentage point above Visa, JPMorgan (NYSE:JPM) rang up gains of 43% in 2019. JPM had struggled with the $114 to $116 area for almost two years. In October, the bank burst over this mark, and hasn’t looked back since.
Shares hit a new high on Thursday, breaching the $140 level. Now what?
JPMorgan is a buy-the-dips stock until bulls are proven wrong. This one has been very strong over the past few months and expecting it to continue forever is unrealistic. But for now, dips to the 20-day moving average have been bought aggressively.
Until this mark fails to buoy JPMorgan, bulls can continue to buy on pullbacks to it. Below the $137 to $138 area, and the tone will shift more cautious — note: not bearish, but cautious. Below the 20-day moving average and $137, and the 50-day moving average is next.
Top Stock Trades for Tomorrow No. 4: Microsoft (MSFT)
Up 55% on the year, Microsoft (NASDAQ:MSFT) was the second-best Dow stock this year.
After consolidating between $132 and $142 for about five months, shares gapped up and over the range, and have been trending higher since. Like JPM, dips to the 20-day moving average have been bought aggressively by the bulls.
Until that trend changes, we shouldn’t bet against it. Flirting with $160 now, MSFT is trying to break out again. If it does, look for a continued run higher. If it can’t muster the strength to hurdle $150, see that uptrend support (blue line) and the 20-day moving average support the stock.
Below puts the $152.50 area on watch, with the 50-day moving average just below that.
Top Stock Trades for Tomorrow No. 5: Apple (AAPL)
These last two are the most impressive to me. Not only do Microsoft and Apple (NASDAQ:AAPL) command $2.5 trillion worth of equity, but they are both up incredible amounts this year. The combined rally between the two of them added $1.13 trillion to their market caps!
That’s such a remarkable figure, it’s hard to comprehend. Let’s put it this way, AAPL and MSFT’s gains total more than the market caps of Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Roku (NASDAQ:ROKU) … combined.
Apple was the best performer in the Dow last year, up a resounding 86%. I love Apple, but if you took a pass at $150 in January 2018 or $190 in August, I would not suggest $290-plus as being the time to buy.
Shares sport an overbought condition (blue circle) and while they can continue higher from here, we need a better dip to buy before getting long. That starts with a correction down to the 20-day moving average and/or the $280 level. Below that and uptrend support (blue line), and the 50-day moving average should buoy the stock.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL, AMZN, V and ROKU.