Top Swing Trade Ideas for Thursday, August 7: First Solar, Pepsico, More

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

Today's top swing trade picks are First Solar (FSLR), Pepsico (PEP) and Tesla (TSLA).

1. First, let's look at First Solar, which provides solar energy solutions worldwide.

First Solar traded up 3.05% on Wednesday, and closed at $65.60 per share.

  • Wednesday's range: $60.15 - $65.94
  • 52-week range: $35.59 - $74.84
  • Wednesday's volume: 9,114,741
  • 3-month average volume: 2,970,850

First Solar looks good to me as a swing trade, as yesterday's volume was three times the normal trading volume. Also, the price action traded up over the 50-day simple moving average and closed over the 50-day SMA. Yesterday's candlestick engulfed many of the previous trading days, and closed right at the resistance level.

This is a trade that is the classic swing trade, since First Solar has been trading sideways since about March, and there's no reason to believe that sentiment has changed. As swing traders, we can play the swings in a sideways trading scenario.

I'd look to enter this trade above $65.31, which is the 50-day simple moving average to be safe. For those of you with a higher tolerance, I'd enter as low as the 20-day simple moving average, at $63.56, and trade it to the peak of the sideways trading channel. I'd set my stop just below the 20-day simple moving average, at say $63. My first target would be the top of the sideways trading channel, at $71.85, which is about 9.5% to the upside from yesterday's close.

Stay long until you see a confirmed sell signal or a close below the t-line.

2. Now let's look at the food and beverage giant, Pepsico.

Pepsi traded positive on Wednesday, closing up to $90.51 per share.

  • Wednesday's range: $88.67 - $90.76
  • 52-week range: $77.01 - $93.09
  • Wednesday's volume: 6,437,109
  • 3-month average volume: 4,079,340

Pepsico doesn't always satisfy, but it does right now -- and it looks good technically. Pepsico has been in a bit of a pullback for the last week or more. The price action pulled back below the 50-day simple moving average and is turning around.

There is a 3-day candlestick signal happening. First there is a bullish candle, followed by a doji-type candle, then followed by a bullish engulfing signal -- 3 bullish signs. (A doji chart has a stock price that opens and closes in almost the same spot, but it may be wide-ranging in price over the course of the day.)

Yesterday, Pepsi closed above the 20-day simple moving average, and it looks to be heading back to the bullish trend that started back in February. This is a pullback opportunity, and allows us to get a cheaper entry price on a chart that is in a solid uptrend.

Look for an entry around $90 or above. Then, I'd set a stop at about $89. Then, I'd target the top of the trend channel and take profits at the top of the channel, then add to the position on pullbacks. Eventually, Pepsico is heading to $100.

Stay long until you see a confirmed sell signal or a close below the t-line.

3. Lastly, let's look at the market darling Tesla, the auto builder.

Tesla traded up on Wednesday, closing up 4.38% to $248.93 per share.

  • Wednesday's range: $238.58 - $251.42
  • 52-week range: $116.10 - $265.00
  • Wednesday's volume: 8,652,465
  • 3-month average volume: 5,906,440

Tesla, Tesla, Tesla -- what a great company to trade. It is always exciting. Yesterday, Tesla broke out above a previous high created at the end of June, confirming the continued bullish trend. This is the classic breakout chart, so let's watch for confirmation today. Now Tesla needs to take out the 52-week high for the next breakout.

I'd look to enter Tesla above the breakout level of $244.49. I'd set a stop just below that level, say $244. My first target would be the 52-week high, which is 6.5% from yesterday's close. The next target would be at the top of the trend channel.

Buy the dip, sell the peak.

Stay long until you see a confirmed sell signal or a close below the t-line.

Good luck traders!

Come see me at my second home and sign up for the two-week trial. You'll find a trading room with tons of professional traders who help each other learn and succeed.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.


TheStreet Ratings team rates PEPSICO INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate PEPSICO INC (PEP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, growth in earnings per share, expanding profit margins and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has slightly increased to $2,491.00 million or 7.69% when compared to the same quarter last year. In addition, PEPSICO INC has also modestly surpassed the industry average cash flow growth rate of 2.99%.
  • PEPSICO INC reported flat earnings per share in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PEPSICO INC increased its bottom line by earning $4.32 versus $3.92 in the prior year. This year, the market expects an improvement in earnings ($4.58 versus $4.32).
  • The gross profit margin for PEPSICO INC is rather high; currently it is at 57.56%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.70% trails the industry average.

Aaron Burt is based out of Sonoma County California, and is a contributor for hitandruncandlesticks.com. He focuses on short-to-intermediate term trades using candlestick analysis as his baseline for his trade ideas. He is a ghostwriter for candlestick analysts. He trades daily and analyzes charts daily. He trades charts, not news; news is subjective, but charts are factual. Follow him on Twitter @aarongallaher.

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