It was a choppy, mostly directionless day in the markets as investors gear up for some heavy-hitting earnings reports. With that in mind, let’s look at a few top stock trades.
Top Stock Trades for Tomorrow No. 1: General Electric (GE)
General Electric (NYSE:GE) broke down to new lows in May before reversing higher and surging from $5.50 to $8.50 in just a few weeks. Since then, though, shares have cooled off and coiled into a tight trading range.
In May, the stock’s ascent was slowed by the 100-day moving average. And while GE stock is trying to reclaim this mark and the 50-day moving average now, earnings will be the deciding factor — which are due up before the open on Wednesday.
On a move higher, I’d love to see GE reclaim these marks and close above the 23.6% retracement near $7.30. Above opens the door for a move up toward $8, and puts the June highs on the table.
On the downside, however, a break of $6.50 would be highly concerning — putting a potential retest of the May lows in play.
Top Stock Trades for Tomorrow No. 2: Shopify (SHOP)
Like GE, Shopify (NYSE:SHOP) also reports earnings on Wednesday before the open. Unlike General Electric, though, Shopify has been a beast — still up more than triple from the March lows.
Shares have been consolidating nicely this month, drifting lower in a bull-flag look as the stock tests up into channel resistance.
From here, I’d love a dip down into the $850 to $875 area that’s met by buyers. There it finds current support, along with the 50-day moving average. Below opens the door to a larger correction. And in that case, it could possibly send the stock down toward $750 and even trigger a test of the 100-day moving average.
On the upside, though, look for a move up through the 261.8% extension near $1,060. Above the current high technically puts the three-times range extension in play at $1,171.
Top Stock Trades for Tomorrow No. 3: 3M (MMM)
3M (NYSE:MMM) is tipping lower after earnings, ending the day nearly 5% lower.
Remain below $156, and MMM will be below all three of its major moving averages. If this area is reclaimed, however, look for 3M to fill the gap up toward $160 and test into other recent key areas like $164 and $170.
If range support near $150 to $152 fails, though. it could put a gap fill in play toward $146 and potentially $137.50. Bulls really do not want to see the $150 level break at this point.
Top Trades for Tomorrow No. 4: Canopy Growth (CGC)
What a nice move we have in Canopy Growth (NYSE:GCG) on Tuesday, up almost 15% on the day. This is the breakout I was looking for earlier in the month, and it turns out CGC stock just needed a little more rest before making the move.
Shares pulled back to uptrend support (blue line), then burst through the 20-day, 50-day and 200-day moving averages, as well as $18.50 resistance. Let’s see if the stock can fill the May gap up toward $20 now. If it can, it puts the May highs in play near $22.
On the downside, however, I would really like to see the 200-day moving average and $18.50 level hold as support. That’s how the May breakout ultimately failed.
Top Trades for Tomorrow No. 5: Cronos Group (CRON)
It’s not just Canopy Growth, but the whole industry making a powerful move. Cronos Group (NASDAQ:CRON) is also pushing through the 200-day moving average on Tuesday.
On the upside, see if it can fill the June gap up toward $7.50. Above that will put the June highs in play near $8.
Like Canopy, though, I want to see Cronos hold the 200-day moving average as support on a drop. Below could technically put a retest of $6 on the table, but we’ll have to re-evaluate it at that time.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret did not hold a position in any of the aforementioned securities.