After a strong open and a push to new highs for many stocks, equities turned lower in Friday’s session on renewed coronavirus fears. Let’s look at a few top stock trades for next week.
Top Stock Trades for Tomorrow #1: Broadcom
After announcing a multi-year, multi-billion dollar deal with Apple (NASDAQ:AAPL), Broadcom (NASDAQ:AVGO) shares were in rally mode, hitting new 52-weeks highs. However, the selling pressure in the overall market rained on AVGO’s parade.
What now?
I would love to see AVGO hold up over the $315 to $318 area, which was stubborn resistance on the way up. If it can do that, it leaves $330-plus on the table, if the market is able to keep its footing.
If it doesn’t and AVGO loses its 50-day moving average, another test of $300 is possible. Below puts the 200-day moving average in play.
Disney
Disney (NYSE:DIS) hasn’t looked too pretty. While the market has spent most of December and January rallying, Disney shares have been putting in a series of lower highs.
In fact, the charts have a descending triangle pattern in play, a bearish technical setup. That occurs when downtrend resistance (blue line) squeezes the stock price lower against a static level of support (black line). It leaves investors looking for a breakdown below support.
That’s exactly what’s playing out in Disney. Given that the market is starting to wobble a bit, investors may be nervous buying DIS. First, let’s see if the 200-day moving average steps in as support, just as it did in October. Below puts gap-up support near $136 in play.
On a rally, bulls need to see Disney stock reclaim $143, as well as downtrend resistance.
Ford
While Tesla (NASDAQ:TSLA) has scorched higher in 2020, Ford (NYSE:F) has done the opposite. Now, it’s really breaking down.
Shares cracked violently below uptrend support and the 50-day moving average, as the stock is now below all of its major moving averages on both a daily and weekly basis.
Let’s see if Ford stock declines to the $8.50 to $8.60 range and if so, if it finds support there. On a rebound, F needs to reclaim the 50-day moving average.
American Airlines
American Airlines (NYSE:AAL) has a similar chart to Ford. After a very strong reversal on Thursday (despite worse-than-expected earnings), shares are again showing signs of weakness.
The stock is losing uptrend support and if it loses the $26.85 level, the post-earnings low near $26 is on the table. On a rally, AAL needs to reclaim uptrend support, but it’s a no-touch for me on the long side with the market’s current state.
Investors should be looking at stocks holding support or near support, not at stocks that are losing it.
IQiyi
IQiyi (NASDAQ:IQ) couldn’t push through the $25 mark and is embarking on a deep retreat on Friday, falling about 10%. The move sent shares right through the 20-day moving average, as sellers hammer the stock.
Now, the $20 to $21 area is in sight, with uptrend support near the former and the 50-day moving average near the latter. That may be a worthy buy-the-dip zone if we see a bit more weakness early next week. Below $20 puts the 200-day moving average on the table.
In any regard, look to see if IQ can reclaim the 20-day moving average on a rally.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL, AVGO and DIS.
