Stocks started off the session with a bang, ripping higher on hopes of a partial trade deal with China. Cannabis stocks weren’t among those rallying, though, as the industry was hammered on Thursday. Let’s look at a few top stock trades.
Top Stock Trades for Tomorrow No. 1: Freeport-McMoRan (FCX)
Shares of Freeport-McMoRan (NYSE:FCX) caught a decent rebound Thursday as UBS analysts said the stock is oversold and slapped a buy rating on the name.
Despite the report, the charts do not look all that healthy for FCX. For starters, it made new 52-week lows on Wednesday. Second, it’s below all of its major moving averages and retracement levels.
Even on Thursday, the stock’s rally is being cut down by the declining 20-day moving average. At this stage, FCX is the very definition of a “prove-it” stock. Let’s see how it does with the 50-day moving average at $9.58 and the 78.6% retracement at $9.77.
Assuming these levels reject FCX, bulls will want to see the stock put in a higher low, potentially signaling that shares have bottomed.
Top Stock Trades for Tomorrow No. 2: Coupa Software (COUP)
Coupa Software (NASDAQ:COUP) has been demonstrating some relative strength over the past few weeks. For that very reason, it was a red-to-green trade candidate for me on Thursday morning.
We pulled the trigger — tweeted here — as the stock has now gone on to post strong gains on the day. It’s over that troubling range resistance between $148 and $150, as bulls look to see if it’s got enough juice in the tank to take out its highs at $156.16.
Above that mark could fuel a further rally. On a pullback, let’s see if $148 to $150 acts as support. Below it puts the 50-day moving average in play.
Top Stock Trades for Tomorrow No. 3: Hexo (HEXO)
There will be a lot of cannabis investors shaking their heads at Hexo (NASDAQ:HEXO) today.
The company slashed its fourth-quarter revenue estimates and yanked its outlook for up to $400 million in full-year sales. It sparked a wave of selling throughout the industry, with many names down double-digit percentages and/or hitting new 52-week lows.
Hexo stock is no exception, down 23% and hitting new lows as we speak. The announcement also comes about a week after the company’s CFO resigned.
This one is a no-touch from me, particularly below its December low of $3.02. Above that mark could spark a rebound back up to its prior channel (blue lines), but even then, prior channel support may very well act as resistance.
Top Stock Trades for Tomorrow No. 4: Cronos Group (CRON)
Down about 6.5%, Cronos Group (NASDAQ:CRON) is not getting hit as hard as many of its peers. The move in cannabis stocks comes just a day after we looked at Canopy Growth (NYSE:CGC), warning investors of the precarious setup.
Like CGC, Cronos has been making a series of lower lows and lower highs, a bearish technical development. However, it still has a significant level of support at ~$7.50, as well as channel support near current prices.
Below $7.50 and the October 2018 low of $6.50 is on the table. If support holds and shares bounce, look for a test of the 20-day moving average.
Top Stock Trades for Tomorrow No. 5: Aphria (APHA)
Aphria (NYSE:APHA) stock is down over 13% on the day, erasing all of its enormous post-earnings rally from August (and more).
Below $5 should have bulls cautious and below $4.55 should have them worried. Below the latter and the December low of $3.75 is on the table. For it to look better on the long side, APHA needs to reclaim $5 and the 20-day moving average.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
