Stocks came into the holiday hitting new high after new high. Why would the post-Christmas session be any different? Let’s look at a few top stock trades from Thursday’s post-Christmas session:
Top Stock Trades for Tomorrow #1: Snap
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On Thursday we got the breakout we were looking for in Snap (NYSE:SNAP) just a few days ago.
Now over $16, bulls have to take care to keep Snap stock over the $15.50 mark. Above it and shares can continue higher up toward $17. Above $17 and $18-plus is possible, although this has been a tough level for the stock this year.
On a pullback where $15.50 fails as support, see if the 50-day and/or 20-day moving averages can buoy the name.
Nasdaq ETF
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While not a direct proxy to the Nasdaq, the PowerShares QQQ ETF (NASDAQ:QQQ) gives investors a pretty good reading on tech stocks — and that reading is screamingly bullish.
But has the QQQ been a bit too hot?
One could certainly argue that it has. The exchange-traded fund (ETF) now has an relative strength index (RSI) reading of 80 (blue circle) and is up more than 17.5% from the October lows.
Bears have to be pulling their hair out at this point, but honestly, when markets get too hot, it doesn’t work out well for bulls either. A controlled pullback would be best at this point, starting with a dip to the 20-day moving average and uptrend support (blue line).
Below that and a revisit of the $205 level and 50-day moving average would help take some of the excess out of the market without derailing the bullish narrative.
Amazon
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Like Snap, Amazon (NASDAQ:AMZN) is delivering on the breakout front. While I was looking for a possible breakout, I didn’t expect it all in one session.
This one is simple now, especially for bulls who came into Thursday long. Ideally, Amazon will stay above prior channel support (blue line). That is the ideal setup, but the vital setup is that it stays above the $1,825 level and the 200-day moving average.
A break below all three of these levels could signal a false breakout and send Amazon shares back down to channel support or worse.
Bulls may look to buy a dip on Friday if we get it, or possibly see if Amazon gives us a red-to-green trade if it opens lower. Either or both of these setups would be ideal for those that missed the boat, while a gap-and-go rally on Friday makes it quite difficult to get on board.
However, this one has badly lagged its peers and could be a great catch-up trade in 2020 if it gains some upside momentum.
WW Inc (Weight Watchers)
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WW International (NASDAQ:WW) is getting whacked on Thursday, down more than 8%. However, it’s putting the stock right into a make-or-break area.
Ideally, the $37.50 to $38 level would have held as support. This area was resistance in September and October, and after a powerful November breakout, this zone was support in December. Not only that, but the 50-day moving average currently sits at $38.42.
In other words, it’s disappointing to see WW knifing through this zone, although uptrend support (blue line) does come into play just below $36.
So what now? Truthfully, holding the first zone would have been more encouraging than WW holding uptrend support. That said, if it’s able to hold the latter and reclaim the $38 level and 50-day moving average, then WW could be a good trade on the long side.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMZN.
