It was a bumpy day in the stock market, as investors continue to hope for a bottom despite no real improvement in the news cycle. That said, here’s a look at a few top stock trades.
Top Stock Trades for Monday No. 1: Starbucks (SBUX)
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I was keeping a very close eye on Starbucks (NASDAQ:SBUX) as it neared $50. Apparently others were too, as this stock bottomed at $50.02 earlier this week, before rocketing higher near $60.
From here, we’ll want to see if Starbucks can reclaim the 200-week moving average near $62.75. Below leaves $60 on the table, and below that, a retest of the $47.50 to $50 support range is possible.
It’s possible that Starbucks falls below this level, as retail stocks remain in a disdainful place among investors. However, long-term investors who can nibble in this zone will likely be very happy in the years to come.
Over the 200-week moving average, though, puts the 100-week moving average in play.
Top Stock Trades for Monday No. 2: General Motors (GM)
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General Motors (NYSE:GM) and Ford (NYSE:F) have been crushed lately — and with a recession likely on the way, it’s no surprise as to why. The writing has been on the wall with GM stock for a while now, but no one was looking for a breakdown of this magnitude.
The stock had been making a series of lower highs since summer, but each decline was buoyed by the 200-week moving average. Once that level gave way, it was a warning to investors about what was to come.
At its lows, shares were more than 50% below the 200-week moving average, a move that took less than four weeks to play out. This is a highlight on why discipline is so important.
From here, we must take a wait-and-see approach. Can shares get up to former support near $23.50? If so, is this level reclaimed or does it act as resistance? Until it’s reclaimed, technically speaking, this week’s lows are on the table.
Top Stock Trades for Monday No. 3: AT&T (T)
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AT&T (NYSE:T) announced that it will cancel its recently established accelerated buyback of $4 billion. The news didn’t move the stock much in pre-market trading, but smashed the stock in regular trading. Shares dove to new 52-week lows.
For such a small buyback vs. the company’s market capitalization size, I think this was actually a smart move to give AT&T flexibility. However, some investors may interpret it as a sign that the company’s balance sheet isn’t all that flexible after acquiring Time Warner in a massive deal.
At around $28.50, the company will pay a 6.7% dividend yield. There is some support near $28. However, if that gives, then $25 may be in play. On a rebound, though, let’s see if T can reclaim its 100-day and 200-day moving averages — near $32 and $32.50, respectively.
Top Stock Trades for Monday No. 4: Walmart (WMT)
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Walmart (NYSE:WMT) is one of a handful of stocks that are holding up well in this market. The stock was under pressure on Friday, although it continues to hold its 200-day moving average.
I want to see WMT rebound higher, reclaiming its 50-day and 100-day moving averages and the $120 mark in the process. Back above these marks puts $126-plus in play. Below the 200-day, however, puts $102 to $104 on the table.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long SBUX and T.
