General Electric (NYSE:GE) and Microsoft (NASDAQ:MSFT) reported earnings and reacted in very different ways. Tesla (NASDAQ:TSLA) could be gearing up for a big move, too. Here are our top stock trades for Monday:
Top Stock Trades for Monday #1: General Electric (GE)
Not long ago, General Electric (NYSE:GE) got the boot from the Dow Jones. A look at its chart shows why that’s no surprise.
In any regard, the conglomerate beat on earnings per share and revenue expectations, but its cash flow and guidance didn’t sit well with investors. Here’s why. Shares are down about 4% on Friday in response.
I have gotten some flack for saying I don’t want to own GE through the summer, despite some long-term investors making the case that it’s a bargain. That may be true, but we need some life in GE before we can step in.
There are two lines on the chart above, both drawn from January 2018. So far, trend-line resistance has held steady, while the $14 to $15 area continues to keep pressure on GE. Support near $12.75 has held up — so far — as GE has twice tested this area. Short of a reversal on Monday, GE is headed for a third test.
With resistance and support converging on each other, GE is setting up for an important technical showdown in the not-too-distant future.
Top Stock Trades for Monday #2: Tesla (TSLA)
Another showdown stock? Tesla (NASDAQ:TSLA).
Tesla stock successfully broke out over downtrend resistance in June, only to fail by the end of the month. At the same time, its declines have been met by a newly emerging trend-line of support, beginning near its April lows. There is also a support range between $300 and $310.
The convergence of trend-line support and downtrend resistance could force Tesla stock to make a large move in either direction.
Should support fail, Tesla will be teetering on that $300 to $310 level, risking a decline should this level also fail. If resistance gives way, a retest of $360 is in the cards. Bulls and bears have each taken turns with Tesla, with neither running away with it.
If I had to bet, which I won’t, I’d lean bullish if only because shares still have a 27% short interest and bears haven’t been able to crack Tesla yet. Remember, there’s nothing wrong with observing some of the more volatile names in the market.
Top Stock Trades for Monday #3: Microsoft (MSFT)
Unlike GE, Microsoft (NASDAQ:MSFT) blew out its earnings results. Earnings came in ahead of expectations, sales of $30.9 billion came in almost $1 billion ahead of expectations and grew 17.5% year-over-year, and guidance topped estimates too.
What more can you ask for?
While MSFT hit new all-time highs on Friday, shares were up less than 2%.
This group, MSFT included, has been red-hot though and I would be a buyer on the dip. For big-time lovers of MSFT, I would even feel comfortable buying a little bit right here.
Top Stock Trades for Monday #4: Home Depot (HD)
This stud has been quietly grinding higher since early April. Like many others, HD needed time to work off its blowoff top from January. Shares went from $160 in November to $205 in January and that was simply too far too fast.
The fundamentals have justified the latest rally, but now getting toward overbought territory (green circle) and $205 resistance, maybe it’s worth another breather.
But don’t make the mistake of turning bearish. I am simply saying I would rather buy HD after some rest and on a pullback to the $195 to $200-ish area. This will give it the time and energy it needs to take out $205 and go higher.
Top Stock Trades for Monday #5: Ford (F)
It’s been a couple of months for Ford (NYSE:F), which just can’t find its groove. We have continued to prefer General Motors (NYSE:GM) to its crosstown rival, even though GM has had trouble advancing lately.
If only being stuck in neutral were the issue for Ford.
Now near $10.50, Ford is down from $12, which it hit about five weeks ago. After trend-line support failed, it’s clear F stock is trapped in a falling wedge. There’s good news and bad news here.
The bad? If Ford breaks lower and falls out of the wedge, its lows just below $10 are back on the table. However, should Ford breakout of the wedge, we could get a rebound into the $11’s.
For now, wait for the break and the stock will tell you which way it will likely go. Don’t bet on which will happen first; wait for it to occur and then pounce.
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