U.S. equities continue to slowly-but-surely squeeze higher, even as resistance looms overhead. U.S.-China trade negotiations continue to improve and the Federal Reserve seems to be backing off its hawkish stance. This has given investors renewed hope, allowing stocks to rally. Let’s get a look at today’s top stock trades.
General Electric (GE)
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Shares hit $6.66 in early December, but more importantly, didn’t retest those lows when the rest of the market hit its low on Dec. 24. GE then powered up and through the 21-day moving average and the $8 level. We highlighted $8 and the 50-day moving average previously and on Wednesday, we got a pullback to this level after a test of $9.
Now what?
After a beautiful bounce, investors have to see how it does with $9 again. As you can see in November, GE got extra volatile once it fell below this mark (blue circle). If GE pulls back and holds $8 again, it’s a buy.
For now, though, I’m looking for another test of $9. Let’s see what happens if and when it does.
Skyworks Solutions (SWKS)
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That’s right. That’s how you know the market was pricing in the absolute worst for SWKS and likely other suppliers as well. What do I want to see now? SWKS get back over the 10-week moving average and $70.
Maybe the stock has bottomed — and it has attractive fundamentals — but I want to be sure that the downside is over. Above $70 and SWKS has a better risk/reward setup.
Huya (HUYA)
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The stock’s move over downtrend resistance and the 21-day moving average sparked a rally over the 50-day and up to $20. The question now is, will $20 and the 100-day moving average act as resistance?
It’s looking like it might, at least in the short-term. If Huya can keep pushing higher though, it may help spark a rally for other Chinese equities. My thoughts? IQiyi (NASDAQ:IQ) could be due for some upside momentum.
Micron (MU)
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However, MU powered through this level while jumping higher by 7% on Wednesday. In doing so, the stock broke out over downtrend resistance (blue line) and is also testing a breakout over the 50-day moving average.
Will the move stick? That depends. But bulls have to see it hold up over downtrend resistance/$34 at this point. If it can, I have faith that the bottom is in. That said, we’re not overbought yet and even though shares are up big Wednesday, they could keep rallying.
I’m watching the $40 to $41 level should MU continue to move higher. This area was important in the second half of 2018, but also marks the 38.2% Fibonacci retracement level from the 2018 high-low range.
Energy ETF (XLE)
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Aggressive bears can short the ETF now with a stop-loss on a close over $64. Conservative bears will wait for the ETF to breach $63 and possibly test $64 before taking a short position. Either way, $64-ish should be a tough level and offers a good risk/reward for bears.
Keep in mind, the XLE’s top three positions are Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and ConocoPhillips (NYSE:COP).
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
