The markets were hammered in late-morning trading, bounced in midday trading and are fading in the afternoon. That said, here’s a look at a few top stock trades, as volatility remains high.
Top Stock Trades for Tomorrow No. 1: S&P 500 ETF (SPY)
Click to Enlarge
Let’s look at the SPDR S&P 500 ETF (NYSEARCA:SPY), because it’s not often we see the S&P 500 unwind more than 11.5% in just five trading days. In fact, over the last two decades, it’s only happened seven times. Three of those times came during the dot-com crash, and two of them came during the Great Recession.
Given the uniqueness of those two events, we can also say it’s only happened twice in the last 11 years. In any regard, what does it mean from here?
I have said it so many times that I’ve lost count now: There will be economic repercussions due to coronavirus.
For some reason, the SPY ignored that fact for weeks, even though it was glaringly obvious. There was also the interesting observation of safe havens like bonds and gold rallying alongside equities. Just this week we mapped out a potential retracement to the $300 level for the SPY.
To get there, it required around a 11.5% pullback from the highs. And with a low of under $300 today, we got the pullback we were looking for.
Now, we need to see if this low sticks or if more lows are coming. On the upside, let’s see if SPY can rally to its 100-day moving average. Above that puts $320 on the table. On the downside, though, it has the prior breakout level near $300, the 200-day moving average and the 50% retracement all nearby.
We may get an eventual retest of Thursday’s low, and it may even break. The question will then be whether the break is temporary and we quickly reclaim those lows, or if it will ignite another decline.
Until then, keep it simple.
Top Stock Trades for Tomorrow No. 2: Apple (AAPL)
Click to Enlarge
A lot of investors have their eyes on Apple (NASDAQ:AAPL) — and why shouldn’t they?
The stock is leaning into a notable level of support here. It’s got the 100-day moving average near $279, a noteworthy level of consolidation from December near $280 and a potential uptrend support line (blue line) nearby.
On a rebound, let’s see if AAPL can reclaim $290. If it can, $300 is possible, along with the 50-day moving average. If support fails and Apple takes out the low from Thursday, however, the 61.8% retracement at $268 is possible. Below $268, and the next stop may very well be $250.
We were just talking about Apple showing signs of waning momentum. Let’s see if the market can find its footing and hold Thursday’s low for a bit, giving others — like Apple — a chance to bounce. Remember, if you’re going to trade this current market environment, keep your trade size appropriate.
Top Stock Trades for Tomorrow No. 3: Square (SQ)
Click to Enlarge
One stock showing some monster relative strength is Square (NYSE:SQ). Shares were up more than 11% at one point, but are still up nicely on the day.
From here, bulls will want to see $82 and the 20-day moving average hold as support. Below, however, puts $74 and the 50-day moving average on the table. Above keeps current resistance near $86 in play. Above $86, though, and a run to $90 is possible.
If the market gives us a decent bounce, SQ could be a go-to name for short-term traders.
Top Stock Trades for Tomorrow No. 4: Starbucks (SBUX)
Click to Enlarge
Starbucks (NASDAQ:SBUX) shares hit a low of $77.36 on Thursday and are trying to bounce. The company’s growth plan in China is certainly set to take a hit as a result of the coronavirus, and the stock is still trying to price that in.
If shares can reclaim $81 — and that’s a big “if” at the moment — then a move up toward $85 is technically possible. Above there and SBUX will face pretty stiff resistance, though, with all of its major moving average and downtrend resistance coming into play.
If it loses Thursday’s low, then technically, $74 is possible.
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 and SBUX.
