Stocks continue to hover near their highs as we head into August and continue to chip away through earnings season. That said, let’s look at a few top stock trades for Tuesday.
Top Stock Trades for Tomorrow No. 1: General Electric (GE)
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General Electric (NYSE:GE) began trading Monday after its 1-for-8 reverse stock split, sending shares from the $12 to $14 range up toward $100. Unfortunately, GE stock fell about 3% on the day.
GE had billions of shares in outstanding stock, so I get the reverse split. But it seems like reverse splitting up toward $100 was the wrong way to do it. Why now a 1-for-6 split and open the stock in the mid-$70s? That way $100 acts as a target.
It doesn’t matter now — this is the situation the stock is in regardless of our opinion.
Shares are fading from the 50-day moving average as well, something that was occurring last week after earnings despite solid results.
Now we must keep an eye on the $96 to $98 area, as well as the 200-day moving average. That may afford bulls a decent dip-buying opportunity should the stock get there.
On the upside, however, $115 becomes the next target if the stock is able to push above the 50-day moving average.
Top Stock Trades for Tomorrow No. 2: Advanced Micro Devices (AMD)
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It’s crazy that Advanced Micro Devices (NASDAQ:AMD) fell on earnings, despite strong results and an impressive outlook. Or the fact that it was due for a rally after a year of consolidation, while Nvidia (NASDAQ:NVDA) was sitting near new highs.
In any regard, we’ve now received four robust days of upside action. Some people ribbed me when I said $115 could be in play, that being the 161.8% extension. Of course to get there, we needed a push to new highs and above $100.
Well we’ve got that and some. I would be trimming some of this AMD stock position if I were long it as a trade and look for $115 on a further push. Aside from that, this one is now a buy-on-dips candidate going forward.
Specifically, I’m talking about declines to the 10-day moving average, followed by the $99 to $100 area.
Top Stock Trades for Tomorrow No. 3: ContextLogic (WISH)
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Shares of ContextLogic (NASDAQ:WISH) are making some noise today, jumping about 5% in Monday’s trading session. The stock has suffered a hard fade from its highs earlier in the year, but has done a good job to break out over downtrend resistance (blue line).
The prior support area near $15 has now turned into resistance. Following the latest dip, WISH stock held the $9 level and is trying to push through several key moving averages.
If shares can reclaim the 21-day and 50-day moving averages, it could put another move up toward $15 in play.
Of course, if it can’t do so and these moving averages act as resistance, then $9 is back on the table. On a close below $9, the $7.50 to $8 zone becomes a potential area of interest.
Top Trades for Tomorrow No. 4: Alibaba (BABA)
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Last but most certainly not least is Alibaba (NYSE:BABA). Investors remain concerned about this one as Chinese regulators continue to crack down on tech stocks.
However, the situation is a bit more complex than that. Not only is Alibaba due to report earnings on Tuesday morning, but the stock is now rebounding back to its prior breakdown spot.
On the weekly chart here, notice the stock’s aggressive bounce from last week’s low as it now pushes back up toward $200 and the 200-week moving average. It’s also rallying back to prior downtrend support (blue line).
This could be setting up as a short-term make-or-break situation. Back over $200 could trigger a move to the $210 area and the 10-week moving average. Above that puts the 21-week moving average in play. Perhaps more importantly though, that type of rally would give prior support the chance to be support again. That’s in reference to the breakdown area I mentioned earlier (near $200).
If the post-earnings reaction is bearish, though, last week’s low is on the table near $180. A close below that could put the March 2020 low on the table near $170 and it would mean that prior support ($200-ish) is now resistance.
On the date of publication, Bret Kenwell held a long position in AMD and NVDA. 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.
