After a strong open, bulls are trying to keep stocks higher on the day. But we continue to muddle through this area of “chop” as investors search for direction. Let’s look at some top stock trades while we’re at it.
Top Stock Trades for Tomorrow #1: Tesla
Click to Enlarge
Plunging more than 8% on Friday, Tesla (NASDAQ:TSLA) stock is under pressure after the company introduced its $35,000 Model 3 and said it’s unlikely to turn a profit in the first quarter.
Above is a six-month chart, a smaller timeframe than we usually use for Tesla. Below $290 and I would have some concern that support is giving way. Downtrend resistance (blue line) is clearly pressuring Tesla, and below support could spell a test of the $250 to $260 lows.
Top Stock Trades for Tomorrow #2: Nasdaq ETF
Click to Enlarge
Let’s look at tech, via the PowerShares QQQ Trust ETF (NASDAQ:QQQ). Despite seemingly everyone calling for a pullback in the market, stocks have continued to gravitate higher. This tough “chop” has made it difficult for swing traders, with a number of false moves (higher and lower) frustrating a number of people.
Is the QQQ setting up for a run to $180+ now? It could be, particularly as uptrend support and the 200-day moving average are still intact. Above the 21-day and it’s hard to get too bearish on QQQ and tech.
But here’s why the QQQ is so important: If this ETF starts to push higher, it can create big-time breakouts in individual stocks, like the two names below…
Top Stock Trades for Tomorrow #3: Apple
Click to Enlarge
Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) are some of the market’s biggest companies. With Apple, this name has been consolidating in a miraculously tight range.
Over uptrend support and the 21-day moving average, and it’s hard to be bearish on Apple. On a breakout over $175, this stock could start to garner some momentum. I am long Apple for its great business, but also separately in anticipation of this potential breakout. Below the 21-day and I’ll reconsider my trade.
Top Stock Trades for Tomorrow #4: Amazon
Click to Enlarge
Amazon and GOOGL are both setting up similarly, so let’s just cover one of them. These big names have all been very quietly consolidating, while a number of other medium- and small-cap stocks have been posting the big moves. If they start to move in unison, it could trigger some big moves in both directions.
I like that AMZN has made a big move over the 100-day moving average, as Amazon could be gearing up for a move to the $1,725 to $1,750 area. Above that and Amazon can really start to fly.
Top Stock Trades for Tomorrow #5: Kroger
Click to Enlarge
Amazon launching a grocery chain is weighing on Kroger (NYSE:KR), which is down over 4% on the day. It’s good that shares are bouncing from the $27 to $27.50 support area and are holding onto uptrend support (black line). That said, KR is hanging by a thread.
The move below all of its major moving averages and its threat to break down from its tightening range — a series of higher lows and lower highs — has me thinking $26 could be coming sooner rather than later.
Watch ~$27.25. Below that and $26 is on deck. All said, the tech names look more enticing to me.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL, GOOGL and AMZN.
