Stocks are stagnating lower on Thursday, but aren’t declining with any real staying power. As boring as that action can be, investors need to be careful not to overtrade. If need be, walk away from your desk for a while and get some fresh air. Then come back and let’s talk about some top stock trades.
Top Stock Trades for Tomorrow #1: Rite Aid
Shares of Rite Aid (NYSE:RAD) are making new lows (what else is new) as the company reported fourth-quarter earnings. RAD missed on earnings and revenue estimates, provided weak guidance and announced 1:20 reverse split.
Let’s put it this way: A healthy company doesn’t reverse split.
We’ve said to avoid RAD stock over and over throughout the years. The company is circling the drain and there’s no reason to trade this one when there’s so many other options out there. Even shorts can be burned by a temporary squeeze.
Top Stock Trades for Tomorrow #2: CVS Health
A cheap valuation, decent growth and a solid dividend aren’t enough to support CVS Health (NYSE:CVS). I highlighted this one as a trade last month before shares promptly jumped about 10%. Since then though, the stock has come back down to this $52 level twice now.
If it gets there again, will it hold as support? The chart looks grim and while I was a buyer on the initial test of $52, I’m not now. There’s no telling where this will find support if the recent lows give way.
On the upside, CVS needs to get above downtrend resistance and the 20-day moving average.
Top Stock Trades for Tomorrow #3: UnitedHealth
UnitedHealth (NYSE:UNH) has a similar chart, with downtrend resistance squeezing the share price into repeated support. Uptrend support (purple line) has given way, so it’s all up to bulls to step up to the plate between Thursday’s lows and $235.
A drop below $230 puts UNH in no man’s land for the time being. If it holds, see if UNH can get above $246 to $250 on a rally.
Top Stock Trades for Tomorrow #4: Canopy Growth
Remember when we talked about the very slow consolidation in Canopy Growth (NYSE:CGC) stock a few months ago? We ended up stopping out of this one as uptrend support and the 50-day moving average gave way.
It looked like $42 was going to hold up as support, but it wasn’t worth the risk to us. As you can see in April though, $42 actually turned into resistance after acting as temporary support.
CGC may pull in some buyers near the 200-day, but cannabis stocks like CGC, Cronos Group (NASDAQ:CRON), Tilray (NASDAQ:TLRY) and others are under pressure. It’s not clear yet whether the 200-day will act as support.
If it does, bulls have a clear line in the sand. If not, look for potential short-term support in the $37 to $38 area. Below that and ~$34 is in the cards.
Top Stock Trades for Tomorrow #5: Intercept Pharmaceuticals
Disappointing late-stage data disappointed investors in Intercept Pharmaceuticals (NASDAQ:ICPT), which is down almost 13% on the day as a result.
Prior resistance near $115 did not act as support, as ICPT is knifing through all three major moving averages on Thursday. It’s not a good look for bulls. If ICPT can’t get back above the 200-day and 50-day moving averages, or if it does temporarily but they turn into resistance, then the stock could be heading lower.
If that’s the case, a test of uptrend support is certainly possible, currently about $15 or 14.3% below current levels. If shares bounce from current levels, look for a retest of $115 and see how ICPT does then.