Stocks were hammered off the open, with the S&P 500 and Dow Jones Industrial Average gapping below the 200-day moving average and taking out their lows from earlier this month. The Russell 2000 also took out its monthly lows. That’s left a lot of top stock trades for us to dissect, particularly as we enter the thick of earnings seasons.
Tesla (TSLA)
Just a day after we broke down how to trade Tesla (NASDAQ:TSLA) over the next few weeks, the company announced that it will release its earnings far earlier than expected.
Now the automaker will join Ford (NYSE:F) in reporting on Wednesday after the close. That’s coupled with news that Citron Research, run by the notorious short-seller Andrew Left, is taking a long position in Tesla.
Despite the markets taking another beating, shares of Tesla have been rallying all day. Shares are now up 10% to $290 ahead of tomorrow’s report. So what now?
Production remains strong, while the company likely turned positive free cash flow and generated a profit in Q3. If confirmed that that’s the case, we could get a rally over $300. The question will then become, can Tesla rally and close above the $300 to $310 range. If so, we could get a rally into the mid-$300s.
Should TSLA selloff on earnings, look to see if the recent range lows near $250 hold.
Boeing (BA)
Boeing (NYSE:BA) is also set to report earnings, with its quarterly results due up on Wednesday before the open.
Like most stocks, BA has been experiencing some turbulence. The question is, will a strong earnings report pull in investors looking for some safety? We’ve seen that action in names like Procter & Gamble (NYSE:PG), as well as dividend-dependable companies like REITs and AT&T (NYSE:T) — more on the latter in a moment.
Given the nature of the market right now, it’s not surprising to see BA’s strong bounce off support. Particularly given that it comes off the 200-day moving average and at a confluence of trendlines.
I actually would feel comfortable owning BA into earnings, with upside to $370 and downside likely limited to roughly $340. On a pullback, look to see if this lower level holds, and on a rally look to see if BA can break through $370.
AT&T (T)
Looking to follow the solid earnings results of Verizon (NYSE:VZ), AT&T will also report earnings Wednesday morning. Now above all three major moving averages and with an attractive 6.1% dividend yield, I wouldn’t be surprised to see AT&T bid up on its results.
The real hurdle will come at $33.85-ish though. A close above this can spark a larger rally in T stock. On a decline, see how ~$32 holds up. Keep it simple.
3M (MMM)
3M Co (NYSE:MMM) fell after reporting earnings, but is bouncing from its sub-$190 lows. $190 is a key level and has been for some time.
Like AT&T, I want to keep it very simple with MMM, particularly in this environment. Conservative investors can bail on MMM on a close below $190. Aggressive traders can use Tuesday’s low as their stop-loss. On a close above $195, a retest of the 200-day moving average is possible.
Apple (AAPL)
For as weak as the markets have been, Apple (NASDAQ:AAPL) never really wavered. Shares have held this $215-ish area as support and did so again Tuesday, even amid the intense selling pressure.
Once stocks began bouncing on Tuesday, it led the indices higher as well. Bears will have trouble making much headway so long as Apple holds up over $215. It’s a significant player with a $1 trillion market cap, both in the market and in investor psychology.
In the same sense, a break below $215 likely spells trouble for the stock market. Although a pullback into the $205 to $208 area will likely be gobbled up by the bulls. Just barely over the 50-day is a good development and in an ordinary tape, I would call Apple a buy, buy, buy!
Conservative buyers may wait for a possible pullback, or at least let Apple setup for another day. Aggressive bulls are already long over the 50-day.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long T and AAPL.
