Stocks took another hit today, as the fatigued run to new all-time highs starts to unwind. The trends are still in bulls’ favor for now, but buyers will need to step in. With all of that in mind, let’s look at a few top stock trades for Wednesday.
Top Stock Trades for Tomorrow No. 1: United Airlines (UAL)
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There are a lot of earnings reactions in today’s Top Stock Trades story, starting with United Airlines (NASDAQ:UAL).
Shares fell about 8.5% on the day, gapping below the 50% retracement and 50-day moving average. From here, shares are coming into the $49 breakout level and the 100-day moving average. Both of these measures have been support in the past.
If that remains true, let’s look for a bounce back over $50 and up toward $54.
On the downside, however, a break of the 100-day puts the 38.2% retracement in play, followed by the 200-day moving average.
Top Stock Trades for Tomorrow No. 2: Johnson & Johnson (JNJ)
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Despite the drama surrounding its Covid-19 vaccine, Johnson & Johnson (NYSE:JNJ) is finding a way to rally from those lows and following earnings.
Shares are pushing through downtrend resistance on the reaction, however, the $167.80 level remains troublesome. That was the gap-down level from earlier this year and was resistance in February and March.
If J&J can clear this mark, it puts $171 in play, followed by the all-time high up at $173.65. Above that, and perhaps we can have a larger push above $180.
On the downside, though, let’s see if JNJ stock can hold $165. Below puts the 50-day moving average in play.
Top Stock Trades for Tomorrow No. 3: Procter & Gamble (PG)
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Procter & Gamble (NYSE:PG) has been a bit volatile on the day, as investors try to sort out which direction to take the stock after earnings. Shares were up less than 1% on Tuesday, although they are up nicely from the lows.
Clearing above its major moving averages, PG stock is struggling with the 61.8% retracement of the most recent range. If it can clear this measure, $140-plus is certainly possible.
Above that puts $145 and the high at $146.92 in play.
A break below the 200-day moving average puts the stock back below too many key measures for traders to remain bullish in the short term.
Top Trades for Tomorrow No. 4: Kansas City Southern (KSU)
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Kansas City Southern (NYSE:KSU) is surging on Tuesday, up 15% on takeover chatter.
The rally nearly sent shares to the 261.8% extension. The mergers and acquisitions (M&A) consideration changes the dynamics of this trade. However, all things being equal, that is our upside target.
That said, it wouldn’t be irresponsible to take some profits on this gap-up if investors are trading the stock (vs. investing in it).
On the downside, however, beware of the possibility for large gap-downs, given that headlines helped drive this name higher. Should shares drift lower, look for support at the 10-day moving average. Below could put a gap-fill in play.
Top Trades for Tomorrow No. 5: International Business Machines (IBM)
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For several quarters, International Business Machines (NYSE:IBM) struggled with the 61.8% retracement near $133. However, earlier this year it was able to break through.
Now extending off that area now, the stock is trying to rally. IBM stock is being met by sellers near $140, but bulls are hopefully they can start to gain some traction.
Over $140 opens up the door to the 78.6% retracement near $144. Above that puts the $148.85 gap-fill in play.
On the downside, though, keep an eye on IBM’s post-earnings low at $136.70. Below and we may fill the gap. Below $132.50, and IBM will lose what little appeal it has left on the long 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.
