The markets gapped higher and slowly churned throughout Monday’s trading session. And after a big week of earnings, we have another full slate of quarterly results to get through. With all of that in mind, let’s look at a few top stock trades for Tuesday.
Top Stock Trades for Tomorrow No. 1: Chewy (CHWY)
I flagged Chewy (NYSE:CHWY) stock last week, as the momentum in e-commerce became clear. Now, that momentum is showing up in the stock price.
Shares jumped 3% on Thursday, 7% on Friday and ended the day Monday up more than 8%. The three-day rally has sent shares above downtrend resistance (blue line) and $52 resistance, while shares are also reclaiming the 20-day and 50-day moving averages.
On the upside now, let’s see if Chewy can get up to the two-times range extension at $62. On the downside, though, I want to see if shares can hold the 161.8% extension and the $52 area as support. If it can, this bodes well for bulls.
Remember, Chewy will not likely report earnings until September. That said, let’s see if this one can gain momentum ahead of that event.
Top Stock Trades for Tomorrow No. 2: Activision Blizzard (ATVI)
Activision Blizzard (NASDAQ:ATVI) has been a beast, hitting new highs ahead of earnings on Tuesday after the close.
On Friday, shares broke out of its ascending triangle pattern, a bullish technical pattern where uptrend support (blue line) continues to squeeze the stock price against a static level of resistance. In this case, resistance came into play near $82.
It would be bullish to see an eventual pullback to $82 hold as support. On the upside, let’s see if shares can rally through the 261.8% extension at $86.64. Above technically puts the three-times range extension in play near $92.
On a pullback below $82, however, see how shares do with a test of the 50-day moving average.
Top Stock Trades for Tomorrow No. 3: Workhorse Group (WKHS)
Workhorse Group (NASDAQ:WKHS) is not for the faint of heart, but the bullish signs were there.
After a monstrous rally in June, shares were consolidating the gains in a tightening range as $14 continued to hold support. A close below $14, and the setup would have lost most or all of its momentum.
Instead, shares burst over the 20-day moving average and downtrend resistance (blue line). On the upside, look for a potential move up to the $20 to $23 zone. A close below the 20-day moving average, though, puts $14 back in play.
Top Trades for Tomorrow No. 4: Tyson Foods (TSN)
Look at that insanely tight trading range Tyson Foods (NYSE:TSN) was trading in ahead of earnings. While Monday’s rally is a subtle sub-2% jump, it technically puts bulls back in control.
Or should I say, it’s the bulls’ game to lose now.
In any regard, keep an eye on $65 resistance on the upside. Above puts the June high in play at $68.71, followed by the 200-day moving average.
On the downside, however, the risk is pretty simple. A close below the 50-day and 20-day moving averages puts a gap-fill back toward $58.75 in play. Below that, and bears will harness momentum.
Top Trades for Tomorrow No. 5: Clorox (CLX)
At some point, the wild run in Clorox (NYSE:CLX) will come to an end, we just don’t know what form that correction will take place in — through price or through time?
Right now, shares are clinging to prior resistance near $230, while holding the 10-day and 20-day moving averages as support. For bulls, let’s exercise some patience.
A break below the 20-day moving average could potentially put a much better buying opportunity in play with a test of the 50-day moving average.
Remember, this stock jumped to a new all-time high ahead of earnings, hitting $238 on Friday. A rotation over that mark puts the 161.8% extension in play at $244.56, (as measured from the March 25th low to the March high).
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret is long CHWY.