Stocks tried to bounce on Tuesday, but the effort was short-lived. That said, let’s look at a few top stock trades as we approach midweek.
Top Stock Trades for Tomorrow No. 1: Alphabet (GOOGL)
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Shares of Alphabet (NASDAQ:GOOGL) were positive at one point on Tuesday, but the selling pressure eventually overwhelmed it. Still, it’s doing better than a number of its FAANG peers.
Investors would likely feel better about that if shares were able to hold up above support. Instead, GOOGL is putting in its second straight day of failure below uptrend support (blue line) and the 50-day moving average.
If it can reclaim this zone, it puts $1,475 back on the table. If it can’t, though, the 100-day moving average is on the table. Below that, and the $1,295 breakout zone is on watch.
Top Stock Trades for Tomorrow No. 2: Energy Sector (XLE)
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The Energy Select SPDR ETF (NYSEARCA:XLE) continues to get hammered, and a slowing in oil demand won’t help matters. The XLE is now perched precariously on the $50 level. As you can see on the weekly chart, this mark has been quite relevant over the years.
First, let’s see if this levels holds as support. If it does, I want to see what a rally back to the $52 to $54 area looks like. Is it a tepid, weak bounce, or is it robust and powerful? If it’s weak, another test of $50 could be in the cards. If it’s strong, though, $56-plus is possible.
Should support fail, it puts $46 on the table. I lean bearish on the XLE right now, but that doesn’t mean a bounce isn’t possible. So, keep an eye on $50.
Top Stock Trades for Tomorrow No. 3: American Airlines (AAL)
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We have not liked American Airlines (NASDAQ:AAL), and while it took some time to play out, we’re finally seeing a move to multi-year lows.
Now below $24, AAL is below the 2019 and 2016 lows. The declining 50-week moving average and downtrend resistance (blue line) continue to squeeze shares lower. This is a weekly chart, so there’s still time for AAL stock to snap back. This could be a classic “look below” before a bounce higher.
However, if $24 fails as support, AAL stock could drift lower into no man’s land. Investors are punishing travel stocks right now; that’s just the way it is. If $24 holds, $26-plus is possible on a bounce. However, this one does not look healthy until it closes above the 50-week moving average.
Top Stock Trades for Tomorrow No. 4: Delta Air Lines (DAL)
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Delta Air Lines (NYSE:DAL) looks healthier than AAL, but it’s struggling as well. On Monday, shares gapped below the 200-day moving average and uptrend support (blue line), and then continued lower on Tuesday.
Soon, the $50.50 to $51 area may be in play. If it holds as support, longs have a great risk/reward setup. A bounce could take DAL stock to $53-plus, while a break of support would result in a stop-out with minimal damage.
Below $50, however, and $47.50 is possible.
Top Stock Trades for Tomorrow No. 5: Salesforce (CRM)
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It took a long time for Salesforce (NYSE:CRM) to find its groove from a technical perspective, but it’s been on fire since it has.
Monday’s pullback was instantly met with buyers, just above uptrend support (blue line) and the 50-day moving average. However, shares stopped short of reclaiming the 20-day moving average, a mark CRM failed to hold on Tuesday as well.
On the upside, I want to see CRM reclaim the 20-day moving average and $185. On the downside, bulls will want to see $180, the 50-day moving average and uptrend support hold as support. Below puts $172.50 and the 100-day moving average on the table.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
