What happened on Thursday? The Nasdaq was hammered, bond yields continue to cruise higher and investors have gone from laughing to crying in a mere 24 hours. It was a tough day on Wall Street and a monthly jobs report is due up Friday before the open. Let’s look at our top stock trades now.
Top Stock Trades for Tomorrow #1: QQQ
With the jobs report on Friday, this fund will be an important one to watch into the weekend. In any regard, we said the fall in TLT (meaning a rise in yields) is good for bank stocks like JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC). It’s no surprise that they were among the best performers despite a tough day Thursday.
However, we also said this would be bad for tech stocks like Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and others. Boy was it. The PowerShares QQQ ETF (NASDAQ:QQQ) took a beating, falling more than 2.3% at its lows. Momo names and high-growth names don’t like higher rates and that’s what we’re seeing right now.
Now what? The QQQ is clinging to the 50-day after already knifing through the 20-day. Friday will be a big driver after the jobs report. It would be constructive to see a decline to the $180 level — the September lows — before a bounce-and-rally to close above the 50-day. If we don’t get the drop-and-bounce, we need to see QQQ eventually recapture the 20-day.
Below $180 and the 50-day and things start to look more dicey.
Top Stock Trades for Tomorrow #2: Constellation Brands (STZ)
I can’t decide if today was a great day to report good earnings or a poor day to do so. Either way, Constellation Brands (NYSE:STZ) did just that, propelling its stock higher by 5% on a day that was otherwise a bloodbath for most names.
After closing just above $210 on Wednesday, shares now find themselves above all the major moving averages and above that troublesome $218 to $220 level. Wow, what can change in just one session.
It’s been choppy for STZ and the market could get dicey. As long as STZ is above the 200-day though, it’s okay on the long side. See if downtrend resistance (blue line) gives it any issue on the upside.
Top Stock Trades for Tomorrow #3: Costco (COST)
Costco Wholesale (NASDAQ:COST) will report earnings after the close Thursday. So what are the levels to watch?
Shares had been on a steady uptrend since April. Losing that mark a few days ago is worrisome ahead of the report. The stock is just above the 50-day right now and it would be encouraging for Costco to hold this mark post-earnings.
Given how close it, that’s not a guarantee though. On the downside see if $225 holds. Below that would be the 100-day (not shown) near $217. On a rally, look to see if COST can get back over its prior uptrend, or whether it finds this mark as resistance now.
Top Stock Trades for Tomorrow #4: S&P 500
The bounce off the lows in the SPDR S&P 500 ETF (NYSEARCA:SPY) was impressive. Quite frankly though, I would have rather seen a deeper decline down to the September lows near $285 and/or the 50-day moving average.
Like the QQQ, perhaps we will get a gap down and rally on Friday, which would make for a better buying opportunity. Trend support sits down near $282-ish, as a rough estimate. See how SPY trades on Friday.
Top Stock Trades for Tomorrow #5: Starbucks
This name has been a total beast lately, although it’s not surprising to see Starbucks (NASDAQ:SBUX) coming off its caffeine spike. I am 100% impressed with this name though, as it ran from $48 to $58 despite a myriad of issues — well, for Starbucks anyway.
Call it what you will, but even before Thursday this name had been doing great. Consolidating nicely above the 200-day moving average (admittedly hard to see) and above what should have been stiff resistance (blue box).
With the added relative strength on Thursday, climbing about 1%, this is one investors might want to think about hiding out in. Earnings later this month might be an issue, but it continues to act wonderfully on the long side. Here’s a close up of the recent action: