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Tuesday, October 27, 2020

4 Top Stock Trades for Monday: MSFT, WKHS, T, DPZ

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After stimulus talks seemed to be off the table just a few days ago, they have been the fuel behind the latest rally. That said, let’s look at a few top stock trades for next week. 

Top Stock Trades for Monday No. 1: Microsoft (MSFT)

This name rallied hard into the September highs, along with the rest of the market. And just like the rest of tech, Microsoft (NASDAQ:MSFT) wasn’t immune to the ensuing pullback, either.

The stock sliced right through its 50-day moving average, but was able to find its footing around the $200 mark. Since then, it’s been slowly but surely coming back. On Friday, we had a nice 2% pop in the name.

However, that pop has sent shares right into the troubling $215 area. The stock has struggled with $215 for a while now, only bursting above it during that late-summer rally. If shares can again clear this mark, it opens up Microsoft to a possible retest of the $230 level.

If $215 is resistance, I don’t want to see shares back below $207. That means it will have lost the 20-day and 50-day moving averages, as well as uptrend support (blue line).

If that happens, it could put a retest of the September lows back in play at $196.25.

Top Stock Trades for Monday No. 2: AT&T (T)

AT&T (NYSE:T) floundered for a long time, then found its footing and rallied into the upper-$30s. However, shares haven’t made up much ground from the coronavirus selloff.

Shares are doing a solid job of reversing off last month’s low. However, AT&T needs to clear downtrend resistance and the 50-day moving average for bulls to start taking this one seriously.

A break of $28 puts a retest of the September lows back in play. If that fails to buoy AT&T, the $26s could be in play.

Over $29 technically puts the 200-day moving average in play, as well as a gap-fill up toward $31.

Top Stock Trades for Monday No. 3: Workhorse (WKHS)

Workhorse (NASDAQ:WKHS) is quietly trying to get going.

After a breakout in September sent shares to new highs, WKHS pulled back and found support at prior resistance near $20. On Friday shares are up almost 10% and are pushing through downtrend resistance.

It would have the all-clear with today’s move if the 20-day weren’t acting as resistance. On Monday, traders will be looking for a weekly-up rotation over Friday’s high at $26.84 and the 20-day moving average.

If they get it, it could put the $30 to $32 area in play.

Top Stock Trades for Monday No. 4: Domino’s Pizza (DPZ)

Domino’s Pizza (NYSE:DPZ) fell hard on Thursday, dropping almost 7% on disappointing earnings. On Friday, it added to the pain, down another couple of percent.

Thursday’s dip looked indecisive, with DPZ basically holding the 50-day moving average, but finding resistance at the 20-day and support at the 100-day. One had to give way and as of now, it’s the 100-day moving average failing as support.

If the stock reclaims the 100-day moving average, bulls could use the post-earnings low as their stop and look for a squeeze higher.

On the downside, I wouldn’t mind taking a shot at this name in the $375 to $380 area. I prefer this vs. buying a reclaim of the 100-day moving average, as the risk/reward is more attractive. A break of $375 likely puts the 200-day moving average on the table.

Ultimately we want to see shares north of $400 and the 50-day moving average, eventually putting a gap-fill in play up toward $430.

On the date of publication, Bret Kenwell held a long position in T.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

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