The S&P 500 ended the day up more than 4%, and bulls were feeling good. That’s a rather meager bounce given last week’s decline, but it’s even worse as the index has struggled to hold those gains. That said, let’s look at a few top stock trades for Tuesday.
Top Stock Trades for Tomorrow No. 1: Costco (COST)
Costco Wholesale (NASDAQ:COST) is not typically known for its volatility. But after last week’s action, it’s hard to hold blame against the stock.
Friday’s rally from the lows was impressive, but COST couldn’t reclaim the 200-day moving average. That is, until Monday after traders realized that consumers were flocking to Costco to stock up on supplies over the weekend, due to coronavirus fears.
Despite struggling around $305 for most of Monday, shares ended the trading day up nearly 10% to $309.
I want to see COST clear and hold its 50-day and 100-day moving averages before finding them as support. While over the latter, it’s struggling with the former. Over $305 and the 50-day moving average, and Costco can continue higher, putting $320 on the table.
Below $300, however, and uptrend support and the 200-day moving average are on the table. Below the 200-day, and a retest of Friday’s low is possible.
Top Stock Trades for Tomorrow No. 2: Target (TGT)
Target (NYSE:TGT) was another retailer enjoying gains for most of Monday. It’s also a former big-time winner that’s gotten caught up in the selloff.
In this case, the 200-day moving average is more or less holding up as support. Shares now need to reclaim uptrend support (blue line) near $110, putting the $117 level on the table.
On the downside, however, a move below the 200-day puts Friday’s low on the table. Below that, and the gap-up low from August is possible near $97.50. I’m not looking for a gap-fill down to $85, but it’s possible if we get a brutal decline in the markets.
However, that levels off the table until some of Target’s other downside markets get hit. If they get hit at all.
Top Stock Trades for Tomorrow No. 3: JD.com (JD)
Not many were looking for JD.com (NASDAQ:JD) to be a massive winner amid the coronavirus outbreak. But ending the day on Monday up more than 12% and hitting new 52-week highs, contrarians are getting paid for their bullish bets.
In any regard, see if shares can now reach $46. Historically, JD has struggled when the share price eclipses this mark.
Moreover, the stock has done a very good job maintaining trend (blue line) and the 10-week moving average. See that it stays above these marks on any pullback.
Top Stock Trades for Tomorrow No. 4: General Motors (GM)
General Motors (NYSE:GM) has not weathered the recent storm well, and that shouldn’t come as much of a surprise. The automobile stocks are not generally the first ones to reach for amid global outbreak concerns.
Last week, GM stock lost its 200-week moving average, as shares tumbled toward multi-year range support at $29.
Investors comfortable owning GM at $30 can risk just over $1 on the downside, and look for $3 to $4 per share on the upside. Overall, bulls will be looking for a rebound back to the 200-week moving average.
But whether GM reclaims this level or not is a different story, though.
Top Stock Trades for Tomorrow No. 5: Patterson Companies (PDCO)
Amid difficult times, it will usually pay off at some point to look for the relative strength in the market. That is, individual stocks that are performing well relative to the S&P 500.
That said, look at Patterson Companies (NASDAQ:PDCO). Does this stock reflect at all that the S&P 500 fell 11.5% last week?
Not. At. All.
The 50-day moving average continues to hold as support, and not only did shares hold up amid last week’s selling, they actually broke out over $24!
So far, rallies to $25 are being sold into, but this one looks beautiful. However, that story changes on a move below the 50-day moving average. But once the market turns higher, PDCO shares should be ready to run.
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.