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TheStreet Open House

Top Swing Trade Ideas for Wednesday, Aug. 13: Microsoft, Southwest Airlines, More

NEW YORK (TheStreet) -- Good day, traders!

Today's top swing picks are Microsoft (MSFT), Southwest Airlines (LUV) and Weight Watchers (WTW).

1. First, lets look at Bill Gates's baby, Microsoft.

Microsoft gained 0.74% on Tuesday to close at $43.52.

  • Tuesday's range: $43.00 - $43.59
  • 52-week range: $30.84 - $45.71
  • Tuesday's volume: 21,433,689
  • Three-month average volume: 28,610,500

Read More: Boeing, Airbus Get Nods at China Southern; Chinese-Built C919 Gets a Maybe

Microsoft looks good at its current price, because Tuesday the chart formed a bullish engulfing signal right at the bottom of the trend channel. This tells us to buy the dip. Microsoft has pulled back about 6% over the last few weeks but found support and bounced off the 50-day simple. At the bottom of the pullback, the chart formed a morning star doji, followed by a gap up, then two days of indecision. Tuesday's candlestick declared a bullish winner in the battle between the bulls and bears. Plus, Tuesday's action pushed the two-day exponential moving average over the t-line, which piques my interest as a buy.

I'd look to enter this trade on strength above $43.31. I'd set a stop at about $43, as a close below there would confirm lower trading. I would first target the 52-week high of $45.71, then add to the position on the dips and take profits at the peaks. Stay long until you see a sell signal, or a close below the t-line.

2. Now, let's look at the airline company, Southwest Airlines.

Southwest gained 0.21% on Tuesday to close at $28.70.

  • Tuesday's range: $28.47 - $28.80
  • 52-week range: $12.64 - $29.70
  • Tuesday's volume: 4,276,735
  • Three-month average volume: 5,967,830

Southwest popped up on my scanner on Monday when the two-day exponential moving average crossed over the t-line, and the t-line crossed over the 20-day simple moving average. This is another case of buying the dip, since Southwest is in a strong, long-term uptrend and trades within a pretty orderly channel. The chart trades up to a new 52-week high, then pulls back to the 50-day simple moving average and repeats.

So right now, Southwest found support at the 50-day SMA and is trading back to the top of the trend channel. I'd look to enter this trade above $28.44. I'd set my stop at about $28. I will target the top of the trend channel, take partial profits at the top and wait to buy the dip when the price comes back to test the 50-day SMA and repeat. Stay long until you see a confirmed sell signal, or a close below the t-line.

Read More: King Digital Is in Worse Shape Than Its Earnings Suggest

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