Stock Market

This week is already one of the busier weeks in quite some time. It’s loaded with end-of-the-month fund rebalancing, earnings and economic reports. It has investors scouring for some hot stocks for tomorrow — and rightfully so.

On Wednesday, we’ll hear from the Federal Reserve, while Thursday boasts earnings from three of the five FAANG holdings. On Friday, we’ll get the monthly jobs number.

To say it’s a busy three-day stretch would be a bit of an understatement. With that said, let’s break down what we’re looking at now.

Hot Stocks for Tomorrow: S&P 500 and Nasdaq

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Source: Chart courtesy of TrendSpider

The S&P 500 and Nasdaq will be in full focus on Wednesday. That’s as we get some early economic data shortly after the open, including the ISM and JOLTs reports. However, all focus will be on the Fed.

It is expected to raise interest rates by 25 basis points. The market is currently pricing in a greater than 99% chance of an increase by this amount. For that reason, I would expect a 25-basis-point hike (and because various Fed members have been telegraphing such an action for weeks now).

That announcement will come at 2:00 p.m. Eastern, with a press conference scheduled for 30 minutes later. It’s not clear how the market will react, although it’s been pulling back over the last few days. One thing is for sure though: the volatility will ramp up after the press conference and likely go through the close.

The Chart: Above is a look at the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), which continues to hold up above $400, as well as the 50-week moving average. However, it’s below last week’s high of roughly $408, as well as the weekly VWAP measure. Bulls need to see the SPY continue to stay above $400. If it breaks below it, $393.50 to $395 is in play. On the upside, they are ultimately looking for a breakout over $410.

Hot Stocks for Tomorrow: Advanced Micro Devices (AMD)

Click to Enlarge

Source: Chart courtesy of TrendSpider

As if the Fed announcement wasn’t enough to wade through, we’ll have earnings to manage as well. One of the larger stocks to focus on will be Advanced Micro Devices (NASDAQ:AMD). The company reports earnings after the close on Tuesday, so it will be in focus on Wednesday morning.

We’ve heard from a few chip stocks already, and the results have been subpar so far. However, even the truly terrible results — like what we heard from Intel (NASDAQ:INTC) — are not being badly punished.

That has me somewhat optimistic about AMD stock, even if the stock sells off a bit on the report. That said, keep this name on watch, because it has a lot of sway over some of its peers and the chip industry as a whole.

Despite expectations for roughly 14% revenue growth last quarter, analysts are forecasting a 27% decline in earnings. However, with estimates still calling for positive growth in 2023, management’s commentary and outlook will be key.

The Chart: AMD is back above most of its key daily moving averages and has been riding uptrend support higher. A bullish reaction could get the stock into $80 resistance. A breakout over this level puts $85 to $86 in play. On the downside, $70 should be a support level. However, a break below that opens the door back down to the low $60s.

Hot Stocks for Tomorrow: Peloton (PTON)

Click to Enlarge

Source: Chart courtesy of TrendSpider

Last but not least we have Peloton (NASDAQ:PTON), which will report earnings on Wednesday before the open. Like AMD, investors who actively trade this name or own it will be gauging to see the market’s reaction to its quarterly results.

Unfortunately, expectations are not all that great heading into the print. The boom fueled by Covid-19 has started to wear off. It’s even as Peloton recently began selling its products on Amazon (NASDAQ:AMZN).

The stock has been rallying hard into the results too, which sometimes does not bode well for the bulls. Peloton stock is up more than 66% from the Dec. 30 low and has almost doubled from its early October low.

That all said, the stock is still down more than 90% from its all-time high and is coming off the holiday quarter. Further, these sorts of “short-squeeze” stocks — or whatever investors prefer to call them — have had quite a bit of momentum lately.

The question is, will earnings fuel more of that momentum or put an end to it?

The Chart: Just keep $13.35 to $13.50 circled on your chart. That’s the monthly-up level over the December high, as well as the 50-week moving average. Over that area opens the door to the $15 level, then the upper $16s. On the downside, bulls want to see support around $12 but need to see it around $10 to $10.50. Below $10, the charts look bearish again.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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

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