Led lower by some poor earnings reactions, the markets are under pressure on Friday as we wrap up the month of July. That said, let’s look at a few top stock trades as we get prepared for the month of August.
Top Stock Trades for Monday No. 1: Apple (AAPL)
Sometimes when a company reports earnings, it’s best to react right away. Sometimes we can snag a bargain on a nasty but unnecessary dip. Other times we can get out of a stock as it rallies on nothing but “hot air.”
On the flip side, sometimes it’s best to give the stock some time to see how it reacts. That’s what we did with Apple (NASDAQ:AAPL), which reported earlier this week.
Following earnings, shares sank from $150 resistance but found support at the 21-day moving average. Following an inside day on Thursday, Friday’s action isn’t all that encouraging. Shares are breaking below Thursday’s low — an inside-and-down move — while being rejected by the 21-day moving average.
Of course, the caveat is that Apple could bounce into the close and negate some of this opening-hour pressure. So here’s how I’m navigating it.
I need to see Apple close above $145.09, the prior all-time high, as well as the 10-day and 21-day moving averages. That puts $150 in play, followed by the 161.8% extension.
On the downside, I’m keeping an eye on the $141.50 area. Apple continues to “wick” higher off this area, but if it fails, it puts the 10-week moving average and prior range resistance near $138 on the table.
Top Stock Trades for Monday No. 2: Caterpillar (CAT)
Caterpillar (NYSE:CAT) is tipping lower on Friday following its pre-market quarterly release. Down about 3% and bulls are looking for a bid.
Keep a close eye on the 200-day moving average. Should it provide a bounce, we could see a rebound into downtrend resistance. However, things get interesting should Caterpillar fail to hold the 200-day moving average.
That puts the $199 level in play, along with the 50-week moving average. A test of this area and a bounce would give investors a nice low to trade against. Failure to hold this zone could usher in a test of the $180 to $182 area.
Top Stock Trades for Monday No. 3: Chevron (CVX)
Like Caterpillar, Chevron (NYSE:CVX) also reported earnings before the open. Unlike Caterpillar, Chevron stock is moving higher on the day, not lower.
Now approaching resistance though, investors need to be careful. Especially as the broader market looks a bit vulnerable up here.
Chevron stock bounced nicely off the 200-day moving average and quickly reclaimed $100. That’s a win for the bulls. But now as the stock continues higher, it’s coming into the 50-day and 21-week moving averages.
If shares reverse lower off this level, we need to keep an eye on the two levels mentioned above — $100 and the 200-day moving average.
If CVX stock can power through the 50-day and 21-week moving averages, it opens up the $110 to $112.50 resistance area.
Top Trades for Monday No. 4: Lordstown Motors (RIDE)
I have not been a big fan of Lordstown Motors (NASDAQ:RIDE) or most of these EV and SPAC stocks. Once the stock failed to hold $9, this prior support level became resistance, a bearish technical development.
Now breaking lower, Ride broke below the critical $6.69 level earlier this week.
That said, there could be potential for a long position in this name.
That could come if shares reclaim $6.69. That will allow aggressive bulls to go long against this week’s low — currently at $6.06 — and look for a larger bounce. Specifically, I would target the 10-day moving average and $7.50 level. Above that, and $8 is possible, followed by $9.
Remember though, this is purely a spec play if it sets up correctly.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.