The markets showed more resilience on Thursday, with many mega cap stocks and all three major U.S. indices hitting all-time highs. Let’s look at a few top stock trades as a result.
Top Stock Trades for Tomorrow No. 1: Alphabet (GOOG, GOOGL)
Shares of Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) were among those hitting new all-time highs on the day, as shares gapped up and hit $1,428.68. It also gapped up over channel resistance.
So what now?
Bulls will want to see GOOGL stock grind along channel resistance, finding the mark as uptrend support. Should the stock keep rallying into earnings, it puts bulls in a tough spot, as expectations will be very high.
That said, the rally to new highs in December went on to consolidate for several weeks before again bursting higher a few days into 2020. In other words, the latest rally came after a pause, so the move hasn’t been too steep. On a pullback, let’s see if the $1,395 to $1,400 area can buoy GOOGL. Below puts the 20-day moving average and uptrend support in play.
Top Stock Trades for Tomorrow No. 2: Tesla (TSLA)
Did Tesla (NASDAQ:TSLA) just run out of … charge? After tagging $498.80, it’s going to have to be close enough to $500 for now.
Tesla’s run has been insane and the stock is certainly extended right now. With today’s gap-and-retreat action, we have a potential top in place. The question now is, will it be a long-term or short-term top?
Those that were active in the session may have used the break to negative territory as an opportunity to get short. Their stop-loss — and a number of other traders too — likely sits up at $500. Over $500 and they will likely be stopped out, but if shorts can crack Wednesday’s low at $468.23, it could kickstart a flush lower.
Perhaps that’s down to former trend resistance near $460, maybe it’s down to $450. We’ll have to see, but it starts with cracking $468. On a larger decline, see how TSLA does with the $435 to $440 area, and the 20-day moving average.
Top Stock Trades for Tomorrow No. 3: Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is similar to Tesla. The stock came within pennies of a psychologically important level — $50 in this case — and has been on a sick run.
If it can haul itself over $50, momentum may continue for the bulls. A break of $47 puts it below short-term range support (black line) and channel support (blue line). That puts the 20-day moving average and the $44.50 level on watch.
Keep it simple: Watch for it to get above resistance or below support, then go from there.
Top Stock Trades for Tomorrow No. 4: Snap (SNAP)
Shocking where resistance came into play for Snap (NYSE:SNAP), isn’t it?
Once the stock broke out over $15.50, a rapid ascent was underway. However, the $18 level remains stiff resistance for Snap, as shares were greeted by sellers.
Below $17 and investors will have their eyes on uptrend support (purple line). If that fails as support, look for the 20-day moving average to buoy Snap. Over $18 puts the 2019 high of $18.36 on the table. Above that and Snap can gain momentum.
Top Stock Trades for Tomorrow No. 5: Zscaler (ZS)
Zscaler (NASDAQ:ZS) was a big IPO winner last year, but when growth stocks fell out of favor, so too did ZS.
The stock was under strong selling pressure in August and September, while halfway through the latter month and shares were crushed lower on a vicious gap down. Zscaler eventually bottomed in October.
From that low, shares have been putting in a steady series of higher lows (blue line), while resistance sat firmly near $53. That set up the stock in an ascending triangle pattern, a bullish technical development.
On Thursday, shares are breaking out over resistance. If the move can stick, ZS could fill the gap up toward $60. There it will find the declining 200-day moving average as well. If resistance holds strong and ZS pulls back, look for support from the 50-day moving average and uptrend support.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long GOOGL.
