The market tried to find its footing after a brutal day on Thursday and following the jobs report on Friday morning. With all of that in mind, let’s look at a few top stock trades as earnings continue to trickle in.
Top Stock Trades for Monday No. 1: Block (SQ)
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Earlier this year, Block (NYSE:SQ) gave us a perfect dip down to the $83 breakout before a monstrous bounce sent it back up toward $150. Now that rally has fizzled out, sending shares back below $100.
On a further dip, let’s see how Block handles the $83 to $87 area. The lower end of the range is prior breakout level and the upper end is the 78.6% retracement. A breakdown and close below this area may put more pressure on Block.
However, a break of this zone and a reclaim of it could open the door for a nice reversal.
On the upside, however, watch $100. Back above it could open the door to the declining 21-week moving average, which was stout resistance on that big rally in March.
Top Stock Trades for Monday No. 2: Dollar Tree (DLTR)
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Believe it or not, there are a handful of stocks that continue to trade well. Dollar Tree (NYSE:DLTR) is among the group and you can see it in today’s action.
Specifically, I was looking for a break of this week’s low at $160.15 and a tag of the 10-week and 50-day moving averages, followed by a bounce back above $160.15.
That allows traders to get long on the reclaim at $160.15 and use a stop just below Friday’s low at $157.85.
On the upside, though, I’d love to see $166 to $167 as a potential trim zone. Above that puts $170 to $171 in play as the next trim zone. That’s followed by $175 to $177.
Top Stock Trades for Monday No. 3: Cloudflare (NET)
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I don’t know how else to say it, but Cloudflare (NYSE:NET) is a top-tier growth name. Unfortunately, the stock has been crushed as it’s caught up in the bear market of growth stocks.
Longs who bought Friday morning’s dip can use a stop-loss near $58 or $59. While that’s $10 below current levels, it’s only a few dollars below Friday morning’s low, near the current support zone in the low $60s and the 78.6% retracement at $59.26. So, where traders buy is important.
On a bounce, the $80 area is back in play. Back above $86 and the $100 level could be on the table. Keep in mind, trading growth stocks has been a nightmare for many investors, so don’t dabble in this arena if the risk is too wide.
As the old saying goes, “I’d rather wish I was in a trade than wish I was out of it.”
Top Trades for Monday No. 4: Under Armour (UAA)
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Under Armour (NYSE:UAA) got steam-rolled today — shocker. It’s been a mess out there and this is not a name I plan on working with personally.
I’d rather be a buyer of high-quality but distressed stocks — Nike (NYSE:NKE) is down 35% from the high and trading into its 200-week moving average — or trading some of the relative strength names, like DLTR.
On the downside for UAA stock, watch $10. A break of this level could put the $7.50 to $8 area in play, which were the lows in Q1 and Q2 2020.
On the upside, however, a recapture of $11.50 and the 78.6% retracement could give longs a potential reversal, with the new risk level being at whatever the low ends up being after $11.50 is reclaimed.
That would put $13.70 in play, followed by a potential push to the $14.75 to $15 zone.
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.
