The Nasdaq and S&P 500 notched new record highs on Monday. Let’s look at a few top stock trades going into Wednesday.
Top Stock Trades for Tomorrow No. 1: S&P 500 ETF (SPY)
In late October, the SPDR S&P 500 ETF (NYSEARCA:SPY) broke out over multimonth resistance near $300. Since then, it has continued to churn higher, only pausing momentarily to catch its breath.
Pressing against $310 now, the ETF is starting to show technical signs of becoming overbought (blue circle).
Perhaps the SPY is an excellent buy right here, right now for those with a one-year outlook. Maybe it’s an excellent sell. No one will know until we’re looking back in hindsight.
But as it stands, this is at least a chart that should give investors pause about near-term upside. The ideal scenario would be for a pullback down to the $300 level that holds as support. That would be an excellent “go-long” signal, especially ahead of a potential year-end rally.
While stocks can continue higher, becoming more overbought may only make the ensuing correction worse. Should shares continue higher, there’s a channel resistance mark between $318 and $320, depending on when the SPY ETF gets there.
This isn’t an alarmist call by any means, but perhaps a signal to consider booking at least some profits and/or holding off on initiating full-sized long positions.
Top Stock Trades for Tomorrow No. 2: PayPal (PYPL)
PayPal (NASDAQ:PYPL) was on fire for a while, but that rally has come to a painful end. Now, shares have been pulling back since July.
The $94 to $95 area acted as support last month and PYPL stock is working on putting in a higher low (purple lows).
While that’s a positive development, this chart has a long ways to go before looking healthy on the long side. In short, bulls need to see PayPal clear downtrend resistance (blue line) and preferably the 200-day and 100-day moving averages as well.
Below the recent low at $99.60, PYPL could retest its October low at $94.77.
Top Stock Trades for Tomorrow No. 3: Disney (DIS)
To much fanfare, Disney (NYSE:DIS) launched its Disney+ streaming service on Tuesday. Is it a sell-the-news event? Not necessarily.
Shares have put together a relatively tight three-day range, which includes Disney’s post-earnings reaction and the launch of its new flagship streaming service. In other words, it’s important.
Shares are over the 100-day moving average now, and this is the must-hold level of support. Below that and DIS could pay a visit to its 50-day moving average. $140.25 is the post-earnings high and the gatekeeper to higher prices. Beyond this mark and Disney shares can continue to push higher.
So long as it’s above the 100-day, DIS stock looks okay on the long side.
Top Stock Trades for Tomorrow No. 4: Amarin (AMRN)
Shares of Amarin (NASDAQ:AMRN) are scorching higher Tuesday, up almost 20%. The move filled the July gap near $21 before pulling back later in the session.
Trading these big moves can be difficult, but we can use recent ranges to help pick our spots.
Over Tuesday’s high and the $21 gap-fill, and AMRN stock can rally to $23. This mark has been resistance for about a year now.
If shares pull back, see if $19 can buoy the name. If not, the stock could pay a visit to the 200-day moving average, but we’ll have to keep an eye on AMRN in this event, as buyers may step in before that.
Top Stock Trades for Tomorrow No. 5: Overstock (OSTK)
Because of Overstock’s (NASDAQ:OSTK) wicked volatility, it’s one of the few stocks on my personal “do not trade” list. However, just because I do not trade it doesn’t mean others do not — but they should be aware of the volatility, as the chart highlights on its own.
Unfortunately for OSTK bulls, this stock made a very decisive move below support between $9 and $9.50, plunging below $8 at one point Tuesday. As long as it’s below $9, I would consider Overstock a no-touch.
A close back above $9 could get a squeeze going, potentially up to the $11.50 to $12 area. There are plenty of better stocks to bottom fish with than OSTK at this time, in my opinion.