While experiencing some selling pressure in the last few hours of the trading session, investors are enjoying yet another rally in the stock market. Can the good times continue or are we about hit a wall? Let’s look at our top stock trades.
Top Stock Trades for Tomorrow #1: Dow Jones ETF
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The SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) has been in a sharp rebound this week, a welcome sight for the bulls. However, the ETF has been trapped between downtrend resistance (blue line) and support (black line) near $242.50.
In fact, this is a similar story to the SPDR S&P 500 ETF (NYSEARCA:SPY) as we highlighted here, and with the PowerShares QQQ ETF (NASDAQ:QQQ) as we noted here.
My concern now is whether the DIA can push through this $250 area and 200-day moving average. If it can’t, the recent lows are back on the table. If it can, Let’s see how it handles $255 and downtrend resistance.
Top Stock Trades for Tomorrow #2: Netflix
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The FANG name under the most pressure lately has been Netflix (NASDAQ:NFLX). Now that the markets have broken down, many names are becoming “prove me” stocks. Meaning, I need proof that it can breakout and rally before putting my hard-earned dollars on the line.
In this case, it’s encouraging to see NFLX log a higher low, as highlighted on the chart by the black uptrend line. However, until it can close above downtrend resistance (blue line), I have little reason to get too bullish right now.
We don’t have to catch the bottom to make money on the long side. Wait for solid setups before taking on too much risk. In this case, bears may look at NFLX as a short should downtrend resistance hold once more, but beware of rising support. If uptrend support fails, a trip to $250 is in the cards.
Top Stock Trades for Tomorrow #3: FedEx
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What a tough ride it has been for FedEx (NYSE:FDX), a pattern that’s been playing out all year — literally. Shares topped out in the first few weeks of January and the decline has only accelerated over the last few months.
Knifing right through its 200-week moving average does not indicate a very bullish sign. I would be more encouraged if FDX is able to rally over this mark, and preferably back to $200 in the next few days. That would not only keep it over the 200-week, but also put it back above key support.
Should FDX fail to do so, look to see how it holds up near $180.
Top Stock Trades for Tomorrow #4: Dave & Busters
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Disappointing earnings sacked Dave & Busters (NASDAQ:PLAY), which added to its recent misery with an 8% plunge on Wednesday. On the plus side, it closed above $46. This level has been notable over the past two years, although that’s not to say it’s gotten the all clear. I like that it broke below this mark, hitting $44.55 actually, and rallied over $47.
I really do not care for the cascading selling action PLAY has encountered over the past week though. Bulls who want to take a shot on this can do so over $46. Below that and shorts can push it to Wednesday’s lows. Below that and there could be notable downside in PLAY.
On the upside, look for a gap-fill and 50-day test near $51.
Top Stock Trades for Tomorrow #5: Ventas
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Ventas (NYSE:VTR) is one of the handful of REITs that I really, really like. It’s been red-hot though, making investors plenty of money over the past few months.
So what now? Coming into its 21-day moving average and uptrend support, I’m actually nibbling a little bit right now. It may correct further, but this name was hot and it’s now cooling off a bit. If support holds, look for a retest of the recent highs. If support fails, see how VTR does around $61. Below there, and the 50-day and 100-day moving averages will likely buoy this name.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long VTR.
