Stocks slipped slightly lower in Monday’s session, after coming off a strong holiday-shortened trading week. With that in mind, let’s look at a few top stock trades for Tuesday.
Top Stock Trades for Tuesday No. 1: Netflix (NFLX)
Netflix (NASDAQ:NFLX) remains a force to be reckoned with. The stock continues to plow higher as investors realize that streaming video has been going through the roof.
Now, the stock price is too, as Netflix shares push through resistance. Bulls will now want to see if NFLX can push up to $400 and reclaim it in the process. If it can, the highs near $415 are in play.
Should shares get rejected by this breakout — in other words, fail to hold the breakout level as support — look for uptrend support (blue line) to support Netflix. Below that may put $340 in play, as well as the 50-week and 100-week moving averages.
Top Stock Trades for Tuesday No. 2: Wells Fargo (WFC)
Wells Fargo (NYSE:WFC), JPMorgan (NYSE:JPM) and others will kick off earnings season on Tuesday before the open.
Of all the bank stocks, Wells Fargo is the one that has really struggled. It will be interesting to hear what the industry has to say this week, and as a result, it’s hard to take a confident position in the stock (long or short) ahead of the results.
On a move higher, I want to see WFC reclaim both the 23.6% retracement at $31.80, as well as the $34 level. Above puts the declining 50-day moving average in play up near $37.28. On a pullback, see if Wells Fargo can hold up above $28. If it can’t, a retest of the $26 low is back in play.
Top Stock Trades for Tuesday No. 3: Zoom Video (ZM)
Zoom Video (NASDAQ:ZM) fell out of favor with bulls after failing to breakout over $160. However, the 50-day moving average did exactly what it was supposed to, sending shares higher as it kicked in as strong support.
Now reclaiming the $130 mark, let’s see if ZM can build up some bullish momentum. If it can, it puts the $160 resistance mark back in play, as well as a potential breakout.
On a pullback below $130, see if uptrend support (blue line) and the 50-day moving average can again step in as support. Below puts $100 on the table.
Top Trades for Tuesday No. 4: TD Ameritrade (AMTD)
TD Ameritrade (NASDAQ:AMTD) stock took a hit on Monday. This stock has been very volatile over the last six to eight months, but still has usable trading ranges (even if they’re very wide ranges).
According to the charts, I have two main areas of focus.
Starting from the top and working down, my first area of interest is $44 to $45. Not only is this a former support/resistance area, but it’s also where investors will find the 50-week and 200-week moving averages. Should AMTD rally up to this point, I expect it to act as resistance. However, above this area puts downtrend resistance (purple line) and the 100-week moving average in play.
The second area of interest is $32 to $34. The top end of that $2 range has proven to be a significant level over the years, while the bottom end of that range was the Q4 low. That came during an industry-wide shakeup as brokers cut their commissions down to zero, before resorting to M&A.
Below $32 puts $28 in play, the 2020 low.
Top Trades for Tuesday No. 5: Microchip Technology (MCHP)
Let’s keep it short and sweet for Microchip Technology (NASDAQ:MCHP).
Shares did a great job reclaiming the $77.50 level. Now we need to see MCHP rally up through $80, putting $85 and the declining 50-day moving average in play.
Should $77.50 fail as support, it puts rising uptrend support (blue line) in play. Below that would be a severe breakdown in the stock price, risking a drop down to the low-$60s.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, he did not hold a position in any of the aforementioned securities.