The futures market looked like Monday would have some solid gains, but the market couldn’t hold it together throughout the session. That said, let’s look at a few top stock trades as earnings season gets into full swing.
Top Stock Trades for Tomorrow No. 1: Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) quietly remains in a tight trading range near its highs as it gets set to report earnings on Tuesday before the open.
From here, bulls are looking for a breakout over the current range or a dip into support. If it’s the former, look for shares to clear $145.50 and rally up to the 161.8% extension at $147.
A close above $147 puts $150-plus on the table.
On the downside, I want to see shares find support at prior resistance near $140 and the 20-day moving average at $141.25. Below could put the 50-day moving average in play, currently near $138.50.
As long as it holds up in this area, buying the dip doesn’t appear to be a horrendous plan.
Top Stock Trades for Tomorrow No. 2: Netflix (NFLX)
Netflix (NASDAQ:NFLX) will also report earnings on Tuesday, but will do so after the close. This one has been very interesting. Although it’s a play on the novel coronavirus, it has had trouble breaking out of its incredibly wide trading range.
On the downside, shares are supported by the $465 area and the 161.8% extension. On the upside, the stock is capped by the $560 to $575 zone and the 261.8% extension.
Hovering closer to the latter zone than the former, bulls have to be thinking about a breakout on earnings. For me, I would love to see this one clear $580 — the top of the range — and remove any question marks about whether the reaction is bullish or not.
Doing so would put the three-time extension in play near $598, followed by a move into the $600s.
On the downside, look to see if NFLX holds the 50-day moving average on a dip. Below puts that $465 to $470 area back in play. Below the 161.8% extension and Netflix may very well test the 200-day moving average.
Top Stock Trades for Tomorrow No. 3: International Business Machines (IBM)
Keeping with the earnings theme, International Business Machines (NYSE:IBM) is set to report earnings on Monday after the close.
IBM recently gave investors good news, as it looks to shift more toward growth by splitting up its business. However, the stock could not close above the 200-week moving average on a weekly basis, which has been resistance since the coronavirus selloff started.
Given how much of a laggard IBM has been, I’m not that interested in it on a dip. If it holds the 10-week and 50-week moving averages, then it still leaves bulls in a good spot. Below and they’ll have to hope $120 holds — and hope is never a reliable strategy.
On the upside, this name needs to clear and hold the 200-week moving average. Above puts this month’s high in play near $135.
With IBM in particular, I’d rather miss the bottom and buy with momentum than look for a dip to get long, as this one has lagged the overall markets so badly.
Top Stock Trades for Tomorrow No. 4: Halliburton (HAL)
Halliburton (NYSE:HAL) is about flat on earnings, which is better than collapsing lower, but it still needs to prove itself.
Shares remain trapped below the 20-day moving average. A rotation above this mark and this month’s high near $13 will put a test of the 50-day and 200-day moving averages on the table.
Above that and HAL could start to squeeze higher, potentially putting $17 in play.
On the downside, a break of $11.70 puts the October low in play at $10.60. Below that and the $9.60 mark is in play, followed by the 23.6% retracement at $9.20.
Top Stock Trades for Tomorrow No. 5: Alpha Pro Tech (APT)
Alpha Pro Tech (NYSEAMERICAN:APT) found itself trending on Monday, as shares popped more than 11% as of this writing.
While $16 has been a notable level in the past, I would like to see APT stock close above this month’s high at $17.08. Above that mark opens the door to $20-plus and potentially puts $24 resistance on the table.
If the stock can clear $16 to $17, see that it holds the 20-day and 50-day moving averages. Below puts the 200-day moving average and uptrend support (blue line) on the table.
I would be concerned with APT stock if it closed below $12.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.