The market’s sidestepped a big market selloff last Monday. This Monday, it wasn’t so fortunate. At its lows, the Russell 2000 and Nasdaq were both down more than 3%, although some positive trade talk did give stocks an afternoon lift. Let’s look at a few names that are in the headlines, giving us some juicy top stock trades to watch.
Top Stock Trades for Tomorrow #1: Amazon
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Amazon (NASDAQ:AMZN) falling to and testing the 50-day moving average will almost surely attract some dip buyers. The stock is $130 off its recent highs and testing a key moving average. Many popular names are getting hit right now.
I might miss my chance in AMZN by waiting, but I’m looking for a slightly deeper correction. If we can get a pullback in Amazon down to the 200-day moving average near $1,755, shares will be down just over 10% from the recent highs.
It’ll also be bumping into prior resistance, which will hopefully act as support. Between this and the 200-day moving average, AMZN stock should at least give us a good bounce should it fall that far.
Top Stock Trades for Tomorrow #2: Uber
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While Lyft (NASDAQ:LYFT) had a much better day-one open than Uber, it too has been a train wreck. Shares are now below $50 and down more than 45% from its opening print.
If you’re thinking about investing in Uber for the next five to 10 years, that’s one thing, (I don’t know if it’s a good price or not). But if you’re looking to trade this one, I would avoid it for now. The stock is too wild and the risk can’t be defined yet.
Top Stock Trades for Tomorrow #3: Teva
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Someone needed to do worse than Uber on Monday and Teva Pharmaceutical (NYSE:TEVA) stepped up to the plate with the stock down about 15% on price fixing allegations.
The 200-week moving average stymied any potential rally in the second half of 2018 and the 10-week moving average kept a lid on each potential rally in 2019 too. It has continued to squeeze Teva lower and has kept the stock in a nasty downtrend.
Now what? A rally back to prior downtrend support may be in the cards, but it’s also likely that this level acts as resistance moving forward. Teva may be setting up for a retest of its lows near $11.50. It may find buyers there, at least in the short term.
Top Stock Trades for Tomorrow #4: Zscaler
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Over the weekend, I was looking for stocks that displayed strength in the previous week amid heightened volatility and increased selling pressure. Zscaler (NASDAQ:ZS) was one of them, even though the stock is down almost 5% on Monday.
That nixed the breakout over $72.50, but with the markets down so heavily on the day, it’s no surprise. I want to see this one pullback a little further into that 20-day/50-day moving average conflux, as well as uptrend support in the same area.
If it does and the pullback holds, ZS is a buy in my mind for the short-term. A break of $65 spells trouble.
Top Stock Trades for Tomorrow #5: S&P 500 ETF
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The 50-day temporarily broke but ultimately held for the SPDR S&P 500 ETF (NYSEARCA:SPY) over prior two sessions before we got to Monday. To start the week though, the SPY gapped below the 50-day and opened near Friday’s lows, where it promptly failed and moved even lower.
Leading up to the break, the 20-day was acting as resistance, a clue that the trend had changed and investors were positioning themselves in a less-aggressive manner. I would look for a bit more downside now. At $275 we have the 200-day and around $277 was a big resistance level in the fourth quarter.
If those levels act as support, we could get a decent bounce — perhaps back up to the 50-day — as we continue to digest trade-war headlines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMZN.
