The stock market rallied into Tuesday’s close and tried its best to extend those gains on Wednesday, with all three major indices rallying throughout the day. The underperformance by the Russell 2000 — the one that led the decline lower — is somewhat concerning, as is the fact that most major indices are getting near the backside of their 200-day moving average. Pausing here makes sense, especially as we go into the weekend. In that light, here are our top stock trades going forward.
Top Stock Trades for Tomorrow #1: Facebook (FB)
Facebook (NASDAQ:FB) initially fell, but then rallied on earnings. Shares were up about 4% on Wednesday, giving investors a tricky map to navigate. On the plus side, it was able to reverse its after-hours losses and move higher on not necessarily great news.
That’s generally bullish price action. But we now see FB essentially clinging to the $150 level and if it can’t sustain these levels, bulls could be in for more downside.
The Cambridge Analytica low of ~$149 needs to hold for bulls to have a chance at ending this current rout. Below that mark and the $140 lows are back on the table. Below that and the potential for trouble escalates.
Top Stock Trades for Tomorrow #2: General Motors (GM)
Much better-than-expected earnings from General Motors (NYSE:GM) launched the stock higher by roughly 10% Wednesday. It was a sight for sore eyes among long-term shareholders who have seen GM bludgeoned since its summer highs north of $44.
While the move over the 50-day and 100-day moving average is impressive, I am concerned as the stock runs into the backside of prior uptrend support (blue line). Some investors own it for the dividend, others for the valuation. Perhaps selling some covered calls isn’t a horrible idea given GM’s recent trading action, today’s big move and the run into potential resistance.
Don’t forget, the 200-day looms just ahead, in the mid-$37s. That said, like Ford (NYSE:F), Tesla (NASDAQ:TSLA) and other recent automakers to report earnings, perhaps GM can continue trending higher.
On a pullback I’m interested near $35 — the bottom of “box” support — and more so around $34, near the 50-day and backside of downtrend resistance.
Top Stock Trades for Tomorrow #3: iQiyi (IQ)
Unlike GM’s 10% rally, iQiyi (NASDAQ:IQ) had a 12% decline after it reported earnings. Known as the “Netflix (NASDAQ:NFLX) of China,” iQiyi actually had pretty good-looking numbers, growing sales nearly 50% year-over-year and boosting users by about 80%.
Sheesh, imagine if NFLX had those types of results.
In any regard, the dark cloud remains firmly in place above Chinese equities at the moment. Below $20 and it’s hard to feel too optimistic based on the charts. The drop puts the $18 IPO price firmly on the table. Below that and the 52-week low of $15.30 is on the table. Above $20 and aggressive bulls can go long with a stop below Wednesday’s low.
Top Stock Trades for Tomorrow #4: Electronic Arts (EA)
What now? It doesn’t matter which blue uptrend line you use — tight or loose — as EA broke below both levels in August. Since then, it has been a falling knife and therefore isn’t a name for me.
If aggressive traders need to take a position, they can do so now with a tight stop near $90 or below Wednesday’s lows. At least here, the 61.8% Fibonacci retracement for the two-year range rests nearby. Admittedly though, this feels like we’re looking for a way to justify a long rather than buying with conviction.
I’d rather get long on a close back over $105. For now, it’s a no-touch for me.
Top Stock Trades for Tomorrow #5: 3D Systems (DDD)
Another no-touch stock for me is 3D Systems (NASDAQ:DDD). Shares tanked almost 30% after the company reported earnings and as analysts finally threw in the towel.
Shares opened near the 200-day moving average and uptrend support, before being promptly loaded into a barrel and pushed over the waterfall. Maybe it finds support at $12, perhaps at $11. But it won’t be my hard-earned dollars put on the line to find out. Or as American Idol’s Randy Jackson would say, “that’s a no from me, dog.”
See where DDD settles down over the next few days if you’re stalking a long position in the name.