Last week ended with a bang and this week started with one. The regional banking crisis has reintroduced a wave of volatility into the financial system, something we’re seeing all across the board. Now more than ever it has investors looking at the hot stocks for tomorrow.
SVB Financial (NASDAQ:SIVB) failed late last week and Signature Bank (NASDAQ:SBNY) failed over the weekend. On Monday, that sparked quite a bit of panic. The CBOE Volatility Index — the so-called “fear gauge” — rallied 50% in two days, bonds yields plunged and financial stocks went haywire.
Of course, we also had the inflation report on Tuesday morning. The in-line results have left investors wondering what the Fed is going to do. Will it raise rates into an obviously tense situation with the banking system? Or will it play it safe even as inflation continues to persist?
Let’s look at a few hot stocks for tomorrow — Thursday — as we push into the second half of the week.
Hot Stocks for Tomorrow: Adobe (ADBE)
Earnings have mostly wrapped up in tech, but that doesn’t mean investors won’t focus on Adobe (NASDAQ:ADBE) when it reports after the close on Wednesday.
When Salesforce (NYSE:CRM) reported earnings in early March, the company delivered what investors were looking for. Lower costs gave a boost to earnings while Salesforce delivered better-than-expected revenue guidance.
That said, it also has the pressure of five activists involved in the name.
Regardless, investors are looking for Adobe to deliver some good news as well. Unfortunately, shares have not been trading that well lately. Up just 21% from its 52-week low, it continues to lag its Big Tech peers on the current rally. Will that change Thursday?
The Chart: Adobe stock is below all of its daily moving averages. After earnings, bulls want to see shares regain $355-plus, putting it above all of these measures. That would open the door to $363, then $370. On the downside, a move below $318.60 triggers a monthly down rotation below the February low, opening the door to $300 to $303.
Dollar General (DG)
It will be interesting to hear what consumers have been up to this quarter. We’ll get a peak into that situation when Dollar General (NYSE:DG) reports earnings before the open on Thursday.
I’m curious to see how this report goes. Management should have some interesting insight on the consumer and inflation. While it likely won’t have market-wide ramifications, it will be one more clue into the retail sector, as well as the consumer.
While Dollar Tree (NASDAQ:DLTR) tends to report around the same time as Dollar General, that was not the case this quarter. Dollar Tree reported at the beginning of the month and while the reaction was not disastrous, it’s been far from bullish. Since earnings, shares are down about 2.5%.
Lastly, it’s worth mentioning that retail overall has not done that well this quarter. Ulta Beauty (NASDAQ:ULTA) and Dick’s Sporting Goods (NYSE:DKS) are two exceptions, but will Dollar General become the third?
The Chart: Dollar General stock is clinging to the $212 to $213 area. A break of this zone opens the door to the $197 to $200 area. On the upside, let’s see if DG can reclaim the $222 to $225 area. Above that puts the declining 50-day moving average in play.
Hot Stocks for Tomorrow: Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) stock has been a bit of an anomaly so far this year. While shares are up about 9% so far in 2023, it lags many of its large- and mega-cap tech stocks. Further, it even lags the Nasdaq’s return so far this year!
For a company that has a massive balance sheet, strong cash flow and decent growth, one would expect the stock to be doing better. Particularly when we consider the flight-to-safety trade over the last few days, what investor is avoiding Microsoft?
Lastly, it has the excitement of AI helping to power the current rhetoric. In fact, the company is going to hold a special event on Thursday, with CEO Satya Nadella and other Microsoft executives detailing the firm’s aim with AI.
The company will reportedly showcase that “ChatGPT-like AI will work in Office apps like Teams, Word, and Outlook. Microsoft recently integrated the artificial intelligence-powered Bing search engine into its Windows 11 operating system.”
Note: It’s come out that Nvidia (NASDAQ:NVDA) is what’s helping to power many of these AI-related technologies. So keep in mind that stock could be on the move too.
The Chart: Bulls need a breakout over $260, but ideally want to see shares close above the fourth-quarter high near $264. That could open the door back to $275 to $277. Above that and $285 is in play. On the downside, a break of $250 puts recent support at $245 in play. Below $241 and the $230s are in play.
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 InvestorPlace.com Publishing Guidelines.
