Monday was an interesting trading day. While the broader indices didn’t show much action, there were tons of moves going on below the surface. Let’s take a look at some of them in our top stock trades for Tuesday.
Top Stock Trades for Tomorrow No. 1: Fitbit (FIT)
Not too long ago, we took a look at Fitbit Inc (NYSE:FIT). With FIT near resistance and overbought in the short-term, we said, “a pullback and some consolidation above the 200-day moving average would be best for bulls or a push through $6.50 followed by some consolidation.”
Well, FIT stock was able to consolidate at $6.50 and now it’s exploding up through $7, up almost 20% to $7.50 on Monday thanks to comments from Citron Research’s Andrew Left.
While it did consolidate near the level we were watching, I won’t pretend like I caught this move. Now above key $7 resistance, it would be nice to see FIT consolidate above this level before trying to go higher. Particularly with an RSI north of 80 (blue circle).
Top Stock Trades for Tomorrow No. 2: Lam Research (LRCX)
Over the last few days, we’ve seen Lam Research Corporation (NASDAQ:LRCX) go from $200 down to $185.
LRCX stock is entering a do-or-die spot for longs. But that’s also good news for prospective bulls, as it gives them a good risk/reward setup.
LRCX needs this $180 to $185 level to hold as support. Should it fail, it opens up the door for shorts to run it down to $175 and then gun for the 2018 lows. I happen to think LRCX has a very solid business, so I wouldn’t count on a drop down $160.
But remember to go with the grain, not against it when trading.
Top Stock Trades for Tomorrow No. 3: Roku (ROKU)
Last week we took a closer look at the fundamentals for Roku Inc (NASDAQ:ROKU) and flagged a potential breakout in the name. Little did we know it would come first thing this week.
After bursting through this $39.50 to $40 level of resistance, ROKU stock can officially say the trend is its friend. Look for $40 to now hold as support should the shares pullback in the short-term.
As for a target, I’m looking for ROKU to challenge the $45 area. Eventually filling its gap from February would put ROKU back over $50.
Top Stock Trades for Tomorrow No. 4: BlackBerry (BB)
One of my favorite things is a KISS — Keep It Simple, Stupid — setup and a solid risk/reward. With BlackBerry Ltd (NYSE:BB), we get both.
The setup is simple: BB stock needs to stay above its previous downtrend resistance line. That means it needs to stay above this $12 area, with the 100-day moving average serving as a solid proxy just below.
The risk/reward then is also simple: Below the mark mentioned above and we bail. Above and we can see if BB will re-challenge its recent highs near $12.55 and hopefully advance past them on its way to $13. There’s great risk/reward with this incredibly simple setup.
Top Stock Trades for Tomorrow No. 5: Nvidia (NVDA)
Nvidia Corporation (NASDAQ:NVDA) is one we haven’t talked about in a while. Shares hit new 52-week highs last week, but are stalling near $265.
So far, its prior high near $260 is holding up as support, but that doesn’t give bulls much wiggle room to be wrong. I’d rather use a smaller trade size and a wider trading range for NVDA. A 2% loss wouldn’t be hard to achieve, especially if stocks come under pressure.
For NVDA, it’s still in that ascending range, and to feel confident, I really just want to see it stay above the $250 to $255 area (blue rectangle). But truly so long as it’s above $235, bulls don’t have a lot to worry about.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, he was long long BB, NVDA and ROKU.
