Trade war worries weren’t enough to sink stocks on Monday, which got off to a hot start for the week. The move has sparked rallies in several top stock trades that we’re watching.
Top Stock Trades for Tomorrow #1: JPMorgan (JPM)
I know many people were watching the $105 level in JPMorgan Chase & Co (NYSE:JPM). However, $106 was the line in the sand for me.
On Monday, it didn’t matter. JPM stock burst through both levels, rallying more than 3% on the day. In late June, JPM and a number of other bank stocks broke below key support and were flirting with another breakdown.
Now back above support, bulls can take a low-risk long position. Below $106, short-term investors can stop out. On the upside, there are two main targets: $111 at downtrend resistance and $116. $1 of downside risk and $4 to $9 of upside. Not a bad setup.
JPM has a reasonable valuation and good growth, and now pays out a 3% yield to boot. Note though, the bank reports earnings on Friday.
Top Stock Trades for Tomorrow #2: Apple (AAPL)
Apple Inc. (NASDAQ:AAPL) will likely hit new all-time highs so long as the market holds up. Those odds have greatly increased thanks to AAPL stock getting back above its trend-line.
It was also encouraging to see shares hug the 50-day moving average as support. Had it broken below, holding $180 and the 100-day moving average would have been important to the bull case.
I happen to like Apple’s growth and valuation profile, so long-term investors can justify staying long. Short-term bulls will want to see shares stay above the trend. Below and look for a retest of $180.
Top Stock Trades for Tomorrow #3: Bank of America (BAC)
The bounce off $27.50 was the real buy signal for Bank of America Corp (NYSE:BAC) bulls. Now up over $29 though, and it again bodes well for bulls.
It will be important to see the bank continue higher and have $29 return to being support like it was over the past six months. Should it become resistance, BAC will suddenly look unattractive. Note: BAC reports earnings on Monday July 16th.
BAC has a similar setup to JPM, although BAC is closer to trend-line resistance. Both banks will need to break through this level to retest their highs. As nice as it is to see support hold up, it’s hard to get truly excited until a stock breaks over downtrend resistance. Need an example? Just look below.
Top Stock Trades for Tomorrow #4: Southwest (LUV)
Southwest Airlines Co (NYSE:LUV) is a name we’ve had on the radar for months now as I have been waiting seemingly forever to see the move that triggered on Monday. Shares broke out over long-time down-trend resistance.
Below $50 and we knew LUV would have been in serious trouble — something we recently pointed out. However, this level held up, LUV was able to base and eventually push through resistance.
Investors can now target $56 on the upside, provided that LUV can get above its 100-day moving average. Hitting this target will also bring LUV close to its 200-day moving average. On the downside, look for the backside of the trend-line resistance it just broke through to act as support.
If it doesn’t, $50 is back on the table and below that is bad, bad news. LUV stock’s chart isn’t cured, but it’s healing.
Top Stock Trades for Tomorrow #5: Twitter (TWTR)
We just talked about Twitter Inc (NYSE:TWTR) after it broke out of its consolidation channel, a bullish move.
Shares then fell about 10% intraday on Monday on news of its fake account purge, accounting for roughly 70 million accounts. Management clarified what was happening though and assured investors that these accounts are not a part of the company’s reported numbers. Phew! Well, shares haven’t recovered all of the losses, but if it can, it speaks very bullishly of the direction.
We were originally targeting $50 on the break over the channel. Even on Monday’s plunge though, the bottom of that channel held strong. I’d really like to see Twitter above the channel, but Monday’s move is a start.
A break back over this level is bullish and we can again target $50 and above. If TWTR stays in the channel, look for support between $40 to $42. Below there and the original breakout spot near $36 to $37 is in the cards.
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