The indices did not move too much on Wednesday, but a handful of tech stocks were hit hard on the day. Let’s look at a few of the top stock trades going into the latter half of the week.
Top Stock Trades for Tomorrow No. 1: Adobe (ADBE)
Adobe Systems (NASDAQ:ADBE) came under pressure Wednesday following a downgrade from Citi analysts.
Shares have been trying to break out over downtrend resistance (blue line) and were actually succeeding before Wednesday. However, the tepid bullish action was not enough to withstand today’s selling.
Nor were the 20-day and 200-day moving averages, as ADBE stock gapped below both metrics. However, it’s finding some reprieve from the 38.2% retracement. Now investors want to know, can ADBE reclaim the 200-day and downtrend resistance or are lower prices in store?
If it’s the latter, look for a decline down into the $258 to $260 area. There it will find a notable level of support as well as the 50% retracement. If that fails to hold, ADBE stock may be in trouble. On the upside, the charts are pretty cluttered until Adobe can clear the 50-day moving average.
Top Stock Trades for Tomorrow No. 2: Netflix (NFLX)
Netflix (NASDAQ:NFLX) is very much a mixed picture ahead of the company’s earnings report on Wednesday after the close.
On the plus side, shares have broken out over downtrend resistance (blue line) and are maintaining above the 20-day moving average. On the downside, they are stuck below the 50-day moving average and the 38.2% retracement.
So what now?
Should shares decline, look to see if the 23.6% retracement at $267.75 can support the name. If not, $260 could be on deck, with the September low of $252.28 below that. Below the September low and the December low is possible.
On the upside, see that NFLX reclaims and holds the 50-day moving average and 38.2% retracement. Above that opens the door to the 50% and 61.8% retracements at $308.61 and $326.81, respectively.
Top Stock Trades for Tomorrow No. 3: Abbott Labs (ABT)
Abbott Labs (NYSE:ABT) was mixed on Wednesday after it reported earnings. However, with clear-cut support nearby and breakout potential, it’s worth watching.
Look at the past year of action. Shares have a consolidation period, then tend to break out to new highs and consolidate again. The old highs also tend to become support.
Luckily, the prior highs near $79 to $80 also intersect with the 200-day moving average and 61.8% retracement. That makes it a pretty solid risk/reward area for investors. Below $79 and traders may consider stopping out.
On the upside, see if ABT stock can break out over downtrend resistance and the 50-day moving average. Over it and a move back to $86-plus could be in the cards.
Top Stock Trades for Tomorrow No. 4: ServiceNow (NOW)
ServiceNow (NYSE:NOW) was hammered on Wednesday and it leaves the stock clinging to support. Shares are just above the 200-day moving average and range support near $250.
Below $250 and the October low of $243.54 is on the table. Below that and the stock could struggle a bit.
If support holds, look for NOW to reclaim the 50-day moving average and rally back up to range resistance near $275. Over $275 and perhaps ServiceNow could retest the backside of its prior uptrend (blue line).
Top Stock Trades for Tomorrow No. 5: Workday (WDAY)
Thought ServiceNow investors were having a bad day? Just look at Workday (NASDAQ:WDAY), which was hit even harder on the day.
The 61.8% retracement held WDAY in check on Tuesday, and on Wednesday the 38.2% retracement is acting as bulls’ saving grace. Below the 38.2% and Wednesday’s low, and the $145 mark could be on the table.
If current support at the 38.2% retracement holds, look for WDAY to reclaim the $165 to $166 area. Above that and it will also have to reclaim downtrend resistance.
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.
