It was a quadruple witching day on Wall Street, leading to extra volatility on Friday. Some late-session trade headlines didn’t help matters. Let’s look at a few top stock trades in deep detail.
Top Stock Trades for Tomorrow #1: ROKU
We covered Roku (NASDAQ:ROKU) earlier this week, but given the drumming that it took Friday — down more than 20% at one point — I thought it was worth looking at again.
Shares bounced on Thursday following a test of the 50-day moving average. However, they began Friday under pressure after Pivotal Research initiated the stock with a sell rating and $60 price target.
Where are we now?
The 100-day is at $109.70, while the gap-fill from the post-earnings surge is down at $100.97. Near there is the 50% retracement for the one-year range at $101.43.
In between the downside levels (the gap fill and the 50% retracement), and the upside (the 100-day moving average), is Roku stock price.
When shares were trading at $105.93 — which they were at one point on Friday — it was down 40% from its highs. From its peak, Roku stock fell about 60% in Q4. So this name has a tendency to shed some weight, but it has given investors an opportunity to get long too. A few lucky ones did.
With 45 minutes to go in the session, Roku stock already surpassed 57 million shares traded. It feels greedy, but I would love to see Roku fill its gap back down to ~$101. A lower open on Monday that reclaims Friday’s close would be the reversal that short-term traders need to get long this one again.
Over the 100-day moving average could get a squeeze going up to the 38.2% near $119 and possibly the 50-day near $128.
If the gap-fill level and the 50% retracement doesn’t hold, the August lows near $96 are on the table. A flush lower from there would be possible if buyers don’t step up and defend Roku.
Top Stock Trades for Tomorrow #2: Amazon
With the stock market near its all-time highs and with several mega-cap tech companies back in favor — like Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) — it’s interesting to see Amazon (NASDAQ:AMZN) act as a laggard.
Shares are down almost 12% off the July highs, when it looked like Amazon stock was going to breakout.
The stock has spent 2019 putting in a series of higher lows (blue line), although AMZN is threatening to break that trend should it continue much lower. Adding more weight to the current price action, the 200-day moving average is about $20 per share below current levels.
Should AMZN lose uptrend support and the 200-day moving average, range support at $1,750 will almost instantly be on the table. Further, the 61.8% retracement is in this area too, at $1,757. If this area fails, then the June lows near $1,672 will be in the cards as Amazon stumbles into no man’s land.
On the upside, look to see how the stock does with the $1,850 area. There it has range resistance and the 50-day moving average. At $1,879 is the 78.6% retracement. Over this area puts $2,000+ back on the table.
That’s a lot of detail to absorb. So try to keep it simple. Below the 200-day moving average, and range support at $1,750 is on the table. Below that mark is bearish. If the 200-day holds, $1,850 resistance is on the table. Above that is bullish and over $1,880 puts $2,000+ in the realm of possibilities.
In between is chop.
Top Stock Trades for Tomorrow #3: S&P 500 (SPY)
Many equity traders prefer to use the SPDR S&P 500 ETF (NYSEARCA:SPY) instead of the S&P 500. So let’s take a closer look at the SPY.
Interestingly, the SPY made a new 52-week high this week, while the S&P 500 did not. And while it hovers just below all-time high resistance between $300 and $301, investors having to digest a Fed day. That’s shown on the charts via a blue box.
I tweeted earlier on Friday that, once the SPY went below the Fed-day highs, it put the Fed-day lows on the table. So long as we remain beneath that mark, those lows remain on the table. Below the lows could create selling pressure.
In short, above the box is good, below the box is bad.
Should the SPY reclaim the Fed-day highs and push over $300, then the recent highs at $301.24 are on the table and above that is blue sky. If the SPY takes out the Fed-day lows, we’ll have to consider downside levels.
The first downside mark is the 20-day moving average currently near $296 and below that is the 50-day at $239.65. Should the SPY fall below those levels, prior range resistance from August will be a key level to watch, between $292.50 and $293. Below that mark and we could really get some downside follow through.
So again, to keep it simple: Over the Fed-day highs and upside can continue. Below the Fed-day lows and we have to be on guard.