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Wednesday, October 28, 2020

Top Stock Trades for Wednesday: AAPL, WFC, DIS, C

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It started off as another strong day for stocks on Tuesday. However, selling pressure eventually caught up with the indices and we got a slight dip on the day. With all of that in mind, let’s look at a few top stock trades — starting with the biggest of them all. 

Top Stock Trades for Tomorrow No. 1: Apple (AAPL)

Apple (NASDAQ:AAPL) burst higher on Monday in anticipation of its iPhone event. To little surprise, we’re getting a sell-the-news reaction on Tuesday afternoon. 

Is it the worst thing? No, even though we all like to see Apple press higher.

In fact, a dip could be a very attractive situation — specifically if shares pull back and fill the gap from Friday near $117. In that area, the 50-day moving average also comes into play.

If support holds, that could set up for an attractive buying opportunity. If it doesn’t and shares eventually close below $112, however, it’s possible the $105 area is back in play.

On a move over this week’s high, the all-time high up near $137 is a possible upside target. 

Top Stock Trades for Tomorrow No. 2: Wells Fargo (WFC)

Wells Fargo (NYSE:WFC) will report earnings on Wednesday before the open. The stock has been beaten relentlessly, with hardly any kind of meaningful rally over the last few months. 

However, there are some possible positives starting to show themselves. They are like pre-catalysts, as right now we don’t have the proper rotations underway to call it a bullish chart. But they are possible if we get a little more movement to the upside. 

Specifically, the stock is holding up north of the 20-day and 50-day moving averages. While dipping a bit on Tuesday, the stock was flirting with a monthly-up rotation over the $26 area. This is actually a multi-month high. 

If WFC can clear this mark and close above it on Wednesday, we may get the rotation we need to see a bullish move. Specifically, it could put $30 and the 200-day moving average on the table. 

On the downside, though, a break of the 20-day and 50-day moving averages puts the September low in play, near $22.60. Below that, and 2020 lows are possible near $22. 

Top Stock Trades for Tomorrow No. 3: Disney (DIS)

Disney (NYSE:DIS) stock is jumping on Tuesday after the company announced new plans for a reorganization. Up more than 3% on the day, it’s a nice but not robust reaction.

On the plus side, though, shares are reclaiming the 20-day and 50-day moving averages with the rally. Furthermore, it solidified the 200-day moving average as support after it was resistance in June.

I would love to see Disney hold Tuesday’s low from here (at $127.90). Below that and a gap-fill is possible, followed by a potential retest of the 200-day moving average.

On the upside, a move above Tuesday’s high puts $135 resistance on the table. That was stiff resistance in August and September. However, a move above that zone puts a gap-fill in play up toward $139.

Top Stock Trades for Tomorrow No. 4: Citigroup (C)

Citigroup (NYSE:C) reported earnings on Tuesday morning. Unfortunately, a top- and bottom-line beat wasn’t enough to keep shares from falling almost 5% on the day. 

From here, let’s see if the stock can hold the 20-day moving average. A close below will put last month’s low in play at $41.29. Below that, and $39 may be a point of interest for longs, although we’d need to see this level prove itself before blindly buying a falling knife. 

Say the 20-day moving average holds (or is broken but soon reclaimed). Then we need to see a rotation over the two-week high at $46.12. 

If Citigroup can gain steam over that level and the 10-week moving average (not shown but currently near $46.50), then the 50-day moving average and downtrend resistance (blue line) will be an upside target. Above that, and $52.50 is possible. 

On the date of publication, Bret Kenwell held a long position in AAPL, C and DIS.

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

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