Stocks were under pressure on Monday, after disappointing announcements from two large cap names. Obviously, we will discuss these stocks in our top stock trades outlook, but it threw a wrench into the plans of investors who had done their trading homework over the weekend. Let’s go.
Top Stock Trades for Tomorrow #1: Nvidia
However, management warned that revenue would come in light for the quarter, as would gross margins. They also signaled that it was related to demand out of China, not demand from crypto miners, which hurt the stock last quarter. And in response, shares fell as far as 15% today.
The plus side though? Shares are off the session lows and did not take out the fourth-quarter lows. Those playing Nvidia now can use Monday’s low as their stop-loss. Below there and we likely retest the fourth-quarter lows and possibly go below.
Remember that Advanced Micro Devices (NASDAQ:AMD) reports on Tuesday after the close, an event that could move Nvidia as well.
Top Stock Trades for Tomorrow #2: Caterpillar
On the plus side, CAT is not taking out its lows from last quarter and is in fact holding up above short-term uptrend support. Given the weakness we’ve been seeing in China, weakness in CAT is not surprising. With that fundamental hiccup and the beating on the charts though, bulls should be careful.
CAT is not much of a buy-on-dips name now given some of these negative catalysts. That becomes even more true if the stock closes below uptrend support. I either want to see shares back above downtrend resistance (purple line) and the 50-day moving average, or retest uptrend support.
Top Stock Trades for Tomorrow #3: Apple
Now above the 21-day moving average and just below a key level near $160, investors are growing anxious about how Apple (NASDAQ:AAPL) will trade after it releases earnings later this week.
It’s bullish to see AAPL stock above downtrend resistance (purple line), its 21-day moving average and short-term uptrend support (blue line). With the company essentially releasing preliminary results earlier this month, investors have seemingly priced in a poor earnings result.
The only concern then becomes a potentially negative outlook. If so, look to see that Apple holds its January lows at $142. Below this mark and AAPL is in some trouble. On a rally, look to see Apple close over $160. The latter move will likely attract breakout buyers and longer-term investors looking to add to their core position.
Top Stock Trades for Tomorrow #4: JPMorgan
This $102 level was important to JPMorgan (NYSE:JPM) stock for most of 2018, until it broke below it in December. Now consolidating near it, JPM is trying to gear up for a breakout through downtrend resistance (purple line).
Working in favor of the bulls is the fact that JPMorgan and its peers already reported earnings. Further, most of the reports were well received. Look to buy a breakout in JPM over downtrend resistance.
Top Stock Trades for Tomorrow #5: American Airlines
American Airlines (NYSE:AAL) continues to trade very, very well since the industry came under pressure earlier this month. Up another 4% Monday and AAL is now up almost 20% from its lows.
We highlighted this $30 level for AAL as strong support, warning investors to bail should it lose this mark. Instead, it’s held up incredibly well.
Now what? Traders who want to book 20% gains shouldn’t kick themselves for locking in a hefty profit. However, if AAL gets up to $38, I would suggest taking some profits there. The 200-day and downtrend resistance loom and traders will be up almost 27% on their position.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL and NVDA.