Turnaround Tuesday proved to be a real thing yesterday, with markets ripping back after a nasty couple of selling days. The strong breadth we saw then continued today, as the indices continue to march higher. That said, let’s look at a few top stock trades for Thursday.
Top Stock Trades for Tomorrow No. 1: Square (SQ)
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I was going to write about Square (NYSE:SQ) yesterday, but just wanted to give it one more day. With that extra day, shares are exploding higher.
The stock reclaimed its 10-day and 21-day moving averages on Tuesday, and powered through the 61.8% retracement on Wednesday. With the move, we not only saw a weekly-up rotation, but a monthly-up rotation as well.
On the upside, I want to see if Square can rally up to downtrend resistance (blue line). Above that, and perhaps the $275 area is in play, followed by the highs near $283.
On the downside, though, bulls want to see $245 to $248 act as support.
Top Stock Trades for Tomorrow No. 2: Johnson & Johnson (JNJ)
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Johnson & Johnson (NYSE:JNJ) looks like it wants to break out, but just can’t find the momentum.
Shares continue to put in a series of higher lows, but also continue to put in a series of lower highs. It’s also struggled with the $170 area for the entire year.
That said, it’s still above all of its major moving averages. Bulls will want to see these measures act as support if we get any post-earnings dips now that the company has already reported.
Below the 50-day moving average, and uptrend support is in play.
On the upside, a move over this month’s high at $171.18 could put the highs in play. Each time the stock runs up to the $172 to $173 area, it has stalled. A move above that zone could finally unlock some real upside in J&J.
Top Stock Trades for Tomorrow No. 3: Coca-Cola (KO)
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Like J&J, Coca-Cola (NYSE:KO) reported earnings and like J&J, it’s not giving us a whole lot to cheer about. But we’re also not booing, either.
The stock is struggling with the $56.50 level, as one can see on the weekly chart above. On the plus side, it’s finally over the 78.6% retracement. Over $56.50 puts this week’s high in play at $57.56. However, above that level, and perhaps we can finally get a push back up to $60.
On the downside, keep an eye on the 78.6% retracement and the 10-week moving average. For now, those are the key support levels on the downside.
Top Trades for Tomorrow No. 4: Chipotle Mexican Grill (CMG)
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Chipotle Mexican Grill (NYSE:CMG) is roasting to the upside on earnings, hitting new all-time highs in the process.
Shares had finally broken out over the $1,565 level, even though CMG stock flirted with a breakdown back below this mark ahead of earnings. Now gapping higher, though, shares are flying right toward the 261.8% extension.
I would expect $1,800 to act as a profit-taking level, at least in the short term. If it’s not, perhaps the $2,000 level and the three-times range extension are in play. That said, I wouldn’t be in a hurry to short this stock.
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.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
