It was another down day as traders fear that the trade war could worsen before it gets better. Let’s look at a few top stock trades in the meantime.
Top Stock Trades for Tomorrow No. 1: Coupa Software (COUP)
It sent shares reeling at the open, but the stock has since recouped most of those losses. Okay fine, I’ll show myself out after the charts, but this one is exciting.
The stock found support at the 50-day and 100-day moving average. After briefly breaking below these marks, shares reclaimed them and rallied higher. Conservative bulls who go long COUP can now use a close below the 50-day and 100-day moving averages as their stop-losses. More aggressive traders will use Tuesday’s low.
Either way, let’s see if the stock can rally up to resistance between $155 and $160. If it can, a breakout could be on deck. On the flip side, a move below Tuesday’s low could put $125 and/or the 200-day moving average on the table.
Top Stock Trades for Tomorrow No. 2: Peloton (PTON)
First Peloton (NASDAQ:PTON) was hated. Then it was apparently loved as momentum traders got a hold of it and ran it from the low-$20’s to a high of $37 just the other day. The stock even rallied 4.5% in the face of a market-wide correction. There were only a handful of stocks showing relative strength that day.
In any regard, shares were down 9% with less than one hour to go in Tuesday’s trading session. It leaves PTON sitting right on the 78.6% retracement. After such a big move up, I’m not in any rush to buy Peloton on its first sign of a pullback.
If the 78.6% retracement holds, let’s see if PTON can erase some of these losses. If not, look for a test down into the $30 to $31 area, where Peloton will find a momentum breakout spot, as well as the 61.8% retracement and 20-day moving average. Falling below that level puts the $29 IPO price on the table.
Top Stock Trades for Tomorrow No. 3: Canopy Growth (CGC)
The S&P 500 spent much of the session lower by more than 1%, yet cannabis stocks were holding up. In fact, they weren’t just avoiding new lows, they were actually trading higher.
Specifically regarding Canopy Growth (NYSE:CGC), bulls have to see two things from the stock, one of which needs to happen, the other of which can’t happen. CGC needs to break above downtrend resistance and needs to avoid making new 52-week lows.
Regarding the latter, the 50-day moving average has been a lid on the stock price and most recently rejected CGC amid its late-November surge. While holding up over $17.50 in the short-term is good, we need to see more before we can trust CGC on the long side. Clearing the 50-day is the first step in that process.
Trading higher amid a down day in the markets could be a positive development in that regard. Let’s keep an eye on this one.
Top Stock Trades for Tomorrow No. 4: Realty Income (O)
One of America’s favorite REITs, Realty Income (NYSE:O) has been struggling lately. For those looking to buy, they may hope those struggles continue.
Shares look to be setting up in a descending triangle pattern (blue lines). That’s where downtrend resistance continues to squeeze a stock lower into a static level of support. If it gives way, it should usher in lower prices.
I don’t know that O will get down to $72, but it would make an excellent buy as it pertains to risk/reward. If its decline takes time, though, the 200-day moving average may support the stock before it gets there.
Top Stock Trades for Tomorrow No. 5: FedEx (FDX)
It feels like FedEx (NYSE:FDX) stock has been struggling for a long time now. $150 has been support over the past year, with one slip down to $138 in October.
Falling below $150 puts that sub-$140 level on watch again. Below that and even more selling can take place. Before we can really trust FDX on the long side, we need to see it reclaim downtrend resistance and the 50-week moving average.