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Friday marked a quiet day on Wall Street as the price of oil declined and tensions between North Korea and the U.S. eased a bit. With the stock market closing Monday for Memorial Day, we're looking ahead to a short week. Here are the top trades to make when the markets resume trading Tuesday morning:
Top Stock Trades for Tuesday: Netflix (NFLX)
Just a few days ago we were eyeing a breakout in Netflix, Inc. (NASDAQ: NFLX ) and it came around much faster than expected. So now what?
Here we have a pretty cut-and-dry chart. Above $340 is good and below sets up a retest of trend-line support. Look for that previous line of resistance to act as support. Should it hold, look for more new highs in NFLX stock.
Top Stock Trades for Tuesday: Twitter (TWTR)
Looking for another breakout? Twitter Inc (NYSE: TWTR ) could on your list sooner than you think.
The social media stock continues to flirt with a break over the $34 level. Should it do so, there's no reason a run to its previous highs can't happen. Luckily if it fails, there's plenty of support below, with the 50-day, 100-day and trend-line support all sitting between $30 and $31.
I'd rather look to buy a pullback or a breakout in Twitter. The most bearish I'd get at this point is staying neutral, as there are a lot better short-selling candidates out there.
Top Stock Trades for Tuesday #3: AMC Entertainment (AMC)
So what qualifies as a good short? How about AMC Entertainment Holdings Inc (NASDAQ: AMC ).
The $16 level has been resistance for nearly a year, but in April AMC was able to push above it and run to $18. After a pullback, AMC was unable to hold $16 and this level should again act as resistance. Luckily, InvestorPlace readers knew to watch this level .
Bears can stay short this stock so long as AMC remains below $16, however - and this is a big however - shares could soon catch a bounce. Trend-line support is in play near current levels (purple line) and the 100-day and 200-day moving averages are nearby.
If AMC bounces to $16, it will give shorts a good spot to initiate or add to their position. It's a low-risk trade, because if AMC breaks out over this level, bears can cover with minimal losses.
Top Stock Trades for Tuesday #4: Teva Pharmaceuticals (TEVA)
Need one more shorting opportunity? Teva Pharmaceutical Industries Ltd (ADR) ADR (NYSE: TEVA ) could be setting up as a low-risk play.
Sporting a short-term overbought reading via the Relative Strength Index (yellow circle) and possible resistance between $22 and $22.50, TEVA could soon fade. If it does, look for support to come into play near $20.
However, shorts should be aware that Teva's restructuring plan is going pretty well and Warren Buffett more than doubled his position in the first quarter.
Now above all three moving averages, TEVA is trading pretty well to be honest. But bears can sink their teeth into the fact that it's near make-or-break levels. Either $22.50 gives way and shorts can stop-out for minimal losses or a fall is coming.
Top Stock Trades for Tuesday #5: Foot Locker (FL)
After a 20% explosion, we can't not talk about Foot Locker, Inc. (NYSE: FL ). The company beat on earnings per share and revenue estimates, but margins declined, same-store sales were negative and revenue dropped year-over-year when excluding currency gains.
So how good was the report really? It only makes FL even trickier.
Thursday's breakout over long-time downtrend resistance would ordinarily trigger a buy signal. But it would take guts to put on a long position ahead of FL's earnings, especially when you look at those big gap-downs on the chart.
Now it's the waiting game. Up 25% in two days is not the time to jump in as a bull. While shares are overbought in the short term, that does make the stock eligible for an automatic decline. Instead, see where it goes from here. If it pulls back, watch how FL handles $50 and if it rallies, see how it handles $57.50 to $60.
Below $50 and a retest of downtrend resistance is in the cards. Above $60 and a run back to its first gap of $68 is in the cards.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell . As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
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