Bulls grabbed the market by the horns on Monday, running stocks higher right from the open. With that in mind, let’s look at a few of our top stock trades from Monday’s notable movers.
Top Stock Trades for Tomorrow No. 1: United Airlines (UAL)
The airlines caught fire on Monday, with the group receiving a sizable bounce. In the case of United Airlines (NASDAQ:UAL), shares ended the day up 5%.
However, the group is not out of the woods yet.
On last week’s dip, UAL stock strained but held uptrend support (blue line). And with Friday’s rebound and Monday’s continuation higher, United is reclaiming the 20-day and 50-day moving averages.
From here, let’s see if shares can continue higher and test $40 resistance. A close above will put the declining 200-day moving average in play and potentially a test of the June highs near $50.
On the downside, though, look for a break of the 20-day and 50-day moving averages. If that occurs, uptrend support is back on the table. Below will challenge the September low at $31.22.
Top Stock Trades for Tomorrow No. 2: Boeing (BA)
Boeing (NYSE:BA) is another name in the group that’s moving well, ending Monday up 6.5%.
This one has been a real rollercoaster over the last week. Shares were rejected from the 50-day moving average on Friday Sept. 18, then gapped down on Monday.
That gap down ultimately forced shares below the summer lows, at $153.41. However, on Friday Sept. 25, Boeing recovered this low and closed near its session highs.
With Monday’s rally, Boeing reclaimed the 20-day moving average, but is now running into the 50-day moving average again. This level has been resistance for the last two months. A close above it puts the $175 to $180 area in play. Above that could potentially put the 200-day moving average and $200 mark are in play.
If the 50-day moving average remains resistance, look to see if Boeing can put in a higher low from last week’s dip. Preferably it will also stay above $153.
Below this month’s low (at $145.02) and more pain could be in store.
Top Stock Trades for Tomorrow No. 3: PepsiCo (PEP)
PepsiCo (NASDAQ:PEP) will report earnings later this week, but bulls seem to be jumping the gun. Shares ended Monday up 1.5%, gapping over key levels and two main moving averages.
Earlier this month, PepsiCo broke below the 200-day moving average. However, all through last week’s volatility the stock held up over the $130 mark.
With Monday’s gap-and-go, the stock is reclaiming the 20-day and 50-day moving average and uptrend support (blue line). It’s also powering through the $137.50 area, which had been resistance for a bit.
On the upside, let’s see if PepsiCo can retest the highs near $142.50 to $144. This area has been resistance all through 2020. Above it could put a move up toward and above $150.
On the downside, though, I want to see the 50-day moving average and/or 200-day moving average hold as support. Below, and $130 must draw in buyers — otherwise we risk a rotation lower into the $120s.
Top Stock Trades for Tomorrow No. 4: Virgin Galactic (SPCE)
Like the rest of Aerospace, Virgin Galactic (NYSE:SPCE) made a strong move to the upside on Monday. Shares rose more than 24% as shares cleared $20.
I have longed like this stock as a spec play, but the name has been volatile. That said, that’s a normal characteristic of speculative holdings.
$15 held as a double-bottom low this month, but with Monday’s rally, SPCE stock is reclaiming the 20-day, 50-day and 200-day moving averages. Let’s see if it can now close above resistance near $21.75.
Above $22 opens the door to the $26 to $28 area, where Virgin Galactic topped out near in July. On the downside, I really want to see the 200-day moving average hold as support. This had been a solid support level for a while, before failing in September.
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.