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U.S. equities began the holiday-shortened trading week in the red, but were able to make up most of their losses by the end of the day. With that rebound in mind, here are our top stock trades for Tuesday.
Keep in mind, Tuesday's stock market trading session will close at 1pm ET.
Top Stock Trades for Tomorrow #1: Tesla (TSLA)
Is the run in Tesla Inc (NASDAQ: TSLA ) over? Not necessarily.
After announcing that it was able to produce 5,000 Model 3s in the last week of June, Tesla had more news. It still expects to be GAAP profitable in the second half of 2018, as well as cash flow positive. It has 420,000 Model 3 reservation in its backlog and plans to increase production up to 6,000 Model 3s a week.
That would bode well for the stock, in most investors' minds.
But that wasn't the case on Monday, with shares rallying to resistance, falling dramatically to support and landing somewhere close to breakeven on the day. So what's the trade?
The backside of Tesla's prior downtrend resistance line held as support (purple line). That is vital to me for more upside in TSLA stock. Should it fail, it would open up a retest of the $300 to $310 level. $360 is still clearly resistance, a level Tesla hasn't been able to sustainably get above.
Should it do so, I think it could ignite a squeeze short and possibly make a run to $390. Given that ~30% of the stock is sold short, any sustained rally could gain steam as shorts begin to cover.
The verdict? Watch the prior downtrend line and $360.
Top Stock Trades for Tomorrow #2: Nasdaq ETF (QQQ)
The PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ: QQQ ) fell below $170 in early trading, before rebounding into the green on Monday.
You can see on the chart that the QQQ still remains in a strong uptrend. That's what happens when your top holdings are names like Apple Inc. (NASDAQ: AAPL ), Amazon.com, Inc. (NASDAQ: AMZN ), Alphabet Inc (NASDAQ: GOOG , NASDAQ: GOOGL ) and Microsoft Corporation (NASDAQ: MSFT ).
In any regard, seeing the ETF above $170 is a good sign for bulls. I'm not fully convinced it can stay there due to the bearish impact of ongoing trade-war talks. But if it can, it will bode well for investors when the tide shifts back into the bulls' favor.
If it can't, look for support around $160 to $162.50.
Top Stock Trades for Tomorrow #3: Twitter (TWTR)
While Twitter Inc (NYSE: TWTR ) has been falling, I actually like the price action as TWTR works off its overbought state. This can been seen as the RSI has gone from 90 to 61 (top of the chart).
For now, keep it simple. Let's see when Twitter breaks out of its current channel and in which direction it does so. A break higher puts its highs back in target. A break below puts $40, then $37 back on the table.
Top Stock Trades for Tomorrow #4: Box (BOX)
Like Twitter, Box Inc (NYSE: BOX ) is another KISS stock.
In fact, this trade is really simple. Shares have all but come back to the prior breakout level near $24. While not shown, this level of prior resistance dates back several years. The mark has held so far as support and BOX is now near $25.30.
Conservative bulls can wait for another possible retest near $24. Aggressive bulls can buy now and add on a further pullback, and/or use a stop-loss should BOX close below $24.
Top Stock Trades for Tomorrow #5: Activision Blizzard (ATVI)
Back in early May, there was some confusion around the earnings report from Activision Blizzard, Inc. (NASDAQ: ATVI ).
However, as long as shares stayed above $66, we said investors could stay long . That's been the case so far, and now up near $77, ATVI is gearing up to retest its highs.
Twice shares have topped out near $79 and after testing short-term support near $73, it will likely give it a go once more. If it breaks through, ATVI could be on a fresh breakout into the $80s. At this rate though, investors should wait - either for a pullback to $73 or a breakout over $79.
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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