The stock market put together a solid rally on Thursday. Investors are hopeful going into the G20 summit, while tech was led higher by semiconductors. The Russell 2000 finally put together a robust rally, helping bolster investor sentiment. Let’s look at a few top stock trades going into Friday.
Top Stock Trades for Tomorrow #1: Rite Aid
After a lull in the earnings schedule, we’re getting a few more reports trickling through this week. This morning we had Rite Aid (NYSE:RAD), a retailer that continues to bleed out.
While the stock initially posted big losses, we’re seeing shares rallying on the day. The stock is finally pushing through the 20-day moving average, an active level of resistance throughout 2019.
The only problem? The 50-day moving average is just above current levels. This level has also been resistance. Maybe RAD will breakout over $8. If it does, a run to as high as $12 could take place. If resistance holds though, a drop back down to channel support is possible.
As a note, I don’t tend to trade RAD due to its volatility.
Top Stock Trades for Tomorrow #2: iQiyi
Earlier this month, we took a closer look at iQiyi (NASDAQ:IQ). Despite the company’s large addressable market and big growth, the stock was getting little love from the market. Technically speaking, we said IQ needed some big gains before it could repair a lot of the damage on the charts.
We’re seeing that Thursday with iQiyi’s 11% rally, following a big award at the Mobile World Congress event.
The move breaks IQ over both former downtrend support and resistance levels (blue lines). Further, if it can hold onto its gains, it will have reclaimed both its 20-day and 50-day moving averages as well.
I would love to see the 50-day act as support now, although acting as resistance in the short term seems more likely. In any regard, if IQ can stay north of prior downtrend resistance — now near $19 — and find the 20-day as support, more upside could be coming.
The 200-day moving average is a solid upside target if buyers keep the stock up. If they can’t and the 20-day doesn’t support it, a drop back to range support between $17.50 and $18 may be in the cards.
Top Stock Trades for Tomorrow #3: KB Home
KBH Home (NYSE:KBH) is up more than 6% after reporting better-than-expected earnings. Like Lennar (NYSE:LEN), the results were good enough to win over investors, although the recent housing data has been subpar, leading to KBH’s initially weak week.
The action here is solid. KBH is bouncing hard off its 50-week moving average and that notable $24 level.
But this part is important: for bulls to maintain their newfound control, KBH needs to reclaim the 10-week moving average and preferably prior uptrend support (blue line) as well. If it can, it puts new annual highs on the table. If it can’t, watch $24.
Top Stock Trades for Tomorrow #4: ConAgra
The decline thrusts CAG stock below a number of key levels and deals a big blow to bulls. What now?
For bulls to regain control, the stock needs to reclaim prior uptrend support (blue line) and the 38.2% retracement for the one-year range at $26.61.
On the downside, I’m watching the low-$24 area. This area is a notable level of resistance and support from Q1 2019, while the 61.8% retracement from the December low to the April high is at $24.16.
Top Stock Trades for Tomorrow #5: Pier 1 Imports
Click to EnlargeLike RAD, Pier 1 Imports (NYSE:PIR), is trying to recover after a nasty post-earnings decline. Unlike RAD though, the stock is not in positive territory. PIR was down 20% in pre-market trading at one point, but shares have pared those losses to “just” 6%.
Still, this stock has been absolutely obliterated. That type of action makes it very hard to buy, even if today’s rally was more bullish. It’s nice to see the stock recovering, but I’m not a long-term believer in PIR.
To keep the momentum alive, the stock needs to reclaim $9. If it can’t — just as it failed to twice in the last two weeks — more losses could be coming. Below $7.75 could usher in a test of $6.