Netflix and Google helped contribute to some big gains in the technology space last week. The Nasdaq had one of it’s best weeks of the year, closing higher by 4%. It’s tempting then, to take some cash off the table since the index is beginning to look extended on a short-term basis.

However, research from @RyanDetrick indicates that we should expect more strength. Since 2009, the Nasdaq has returned an average of 1% the week after a 4% weekly gain (as shown in the chart below).

nasdaq weekly gains chart

Overall then, traders are advised to continue with a bullish bias, this is a bull market after all.

Week Ahead

2nd quarter earnings will dominate next week with the calendar relatively light in terms of economic releases. Geopolitical tensions seem to be abating so bears may find it difficult to build a case. That said, it seems unlikely that we will get a week as strong as last.

Here are this week’s picks

Trend followers

Immunogen Inc. $IMGN

Immunogen Inc. is a biotech stock with a market cap of $1.67 billion. The company is currently running clinical trials for a number of cancer treatments and has several products in the pipeline. The company has zero debt and is scheduled to report earnings before the open on July 31, a couple of weeks away.

The stock has moved past a couple of analyst price targets but has done so with great conviction and managed to finish near it’s highs last week. Traders should look to buy into strength this week and keep a tight trailing stop loss.

immunogen stock chart stock pick

Earnings play

Microsoft $MSFT

Microsoft will report earnings after the bell on Tuesday so traders should watch out for potentially volatile price movement. We have already seen a number of technology stocks surge on better than expected earnings, so if we get another good number in the space, Microsoft shares should rally.

Analysts at UBS currently have a buy rating on the stock with an upper price target of $52 and the stock also has plenty of bullish sentiment on StockTwits.

msft stock chart

Short sellers

Macy’s Inc. $M

One stock that could fall back this week is Macy’s. Shares in the Department store chain surged on heavy volume last Wednesday but momentum seemed to slow on Friday. The stock was unable to close near it’s highs and ended up forming an inverted hammer formation on the daily chart.

Analysts at Barclays have a sell rating out on the stock and see a potential downward move to $63. The stock also has a high amount of negative sentiment on the social platform StockTwits.

macys-stock-chart

 


 

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