After a solid rally on Friday, stocks were a bit more tame on Monday as investors gear up for an intense week of earnings. That said, let’s look at a few top stock trades as those reports loom.
Top Stock Trades for Tomorrow No. 1: Amazon (AMZN)
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Amazon (NASDAQ:AMZN) is set to report earnings on Thursday. The stock has been performing quite well lately too.
Last month, shares gave bulls a pump-fake by breaking down below the 200-day moving average. However, the 50-week moving average stepped in as support, as did the $2,888 level. The latter has been in play for almost a year now.
In any regard, the stock found some fresh momentum on Monday on rumors of a stock split.
While a stock split would likely help break Amazon stock out of its recent range, the lack of a split could keep it there. It’s feeling more and more like the stock split matters more than the actual results, which is crazy.
Just for some perspective, remember that the company had a false breakout over $3,345 the last time it reported earnings.
From here, let’s see if shares can push through current resistance at $3,434. Above that opens the door to the current highs near $3,550. Above that, and perhaps AMZN stock can run toward the 161.8% extension, a longer term price target near $3,975.
On the downside, a break of $3,345 could put the 21-day moving average in play, followed by $3,200.
Top Stock Trades for Tomorrow No. 2: General Electric (GE)
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General Electric (NYSE:GE) will report earnings on Tuesday before the open. An early rally on Monday was sold, as per-earnings optimism turned to nervousness.
From here, I want to see if bulls can maintain momentum. If so, they need to ram GE over the March high at $14.41. That opens the door to $15-plus and could eventually put the 161.8% extension as a longer term target in play.
On the downside, though, I’d love to see shares hold up over the pre-coronavirus 2020 high at $13.26. Below the 50-day moving average and uptrend support (blue line) could put the $12.25 level on the table.
Either one of those areas — the 50-day moving average and uptrend support or the $12.25 area — could be buying opportunities. Let’s see how the stock reacts to earnings.
Top Stock Trades for Tomorrow No. 3: Otis Worldwide (OTIS)
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At the time, Otis Worldwide (NYSE:OTIS) did not seem to pick a great time to start trading on its own, doing so in April 2020. However, the stock has been marching higher ever since.
Can it continue to ride the elevator higher after a post-earnings jump?
Shares finally broke out over $68 in late March and drifted higher into earnings. The stock then gapped over the 161.8% and two-times range extensions on earnings. From here, I’d love to see Otis hold the $75 level. If it can do that and take out Monday’s high, it puts the 261.8% extension in play near $80.
Below $75, and the stock may test down toward the 161.8% extension. I’d look to buy a dip to the 10-day moving average as a trade based on the current setup.
Top Trades for Tomorrow No. 4: GameStop (GME)
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GameStop (NYSE:GME) is not a name I typically include in this column simply because it’s too volatile. However, it’s often looked at as the benchmark for Reddit stocks.
After two viscous squeezes to the upside, the stock has been settling into a wedge pattern consisting of lower highs and higher lows.
Currently struggling with its 21-day moving average, keep an eye on this one. Over the 21-day could put a weekly-up rotation in play near $175. Above both marks and it’s possible that GME stock starts to squeeze higher once again.
In that scenario, it could put the $200 to $212 area in play.
On the downside, however, a break of $150 could set up GameStop for a rotation lower and put the March lows in play near $117. Just keep both sides of the action in mind.
Note: This stock is not a suitable trading vehicle for most investors and particularly not on the short side.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
