After a painful finish on Tuesday, equities bounced back hard on Wednesday. And with that in mind, let’s look at a few top stock trades for Thursday.
Top Stock Trades for Tomorrow No. 1: Home Depot (HD)
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Shares of Home Depot (NYSE:HD) continue to chug higher. The stock hit new all-time highs on Wednesday, and has now doubled from the March lows.
The stock is starting to get stretched though, as the RSI reading at the top of the chart suggests HD is overbought. Now keep in mind though, the RSI can remain at elevated levels for longer than expected — a reading like this does not equal “sell” without other catalysts.
Home Depot should report earnings next week. I want to see how shares trade ahead of the result. If they keep on climbing, it may be difficult for shares to rally on the results. On the downside, a dip to the 20-day moving average and uptrend support (blue line) will likely be a buying opportunity.
Same with a drop to the 50-day and breakout level near $255, a development that would be more likely to happen if shares dipped on earnings.
Top Stock Trades for Tomorrow No. 2: Novavax (NVAX)
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Pat yourself on the back if you own Novavax (NASDAQ:NVAX) with a sub-$10 cost basis. That said, shares are starting to unwind.
The stock is breaking below the 20-day moving average, but trying to hold $125. I don’t love playing high-flyers like this one. If I do, I’d rather improve my risk/reward — even if that means missing an opportunity.
In this case, a dip into the $90 to $100 area is more attractive. There it finds prior breakout support (near $90), uptrend support (blue line) and the 50-day moving average.
Below and this one could fill the gap down to $80, and possibly move lower.
Top Stock Trades for Tomorrow No. 3: Rosetta Stone (RST)
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Rosetta Stone (NYSE:RST) is one that remains on my radar. This is not the learn-a-foreign-language company we remember from years ago. It has transformed into an education and subscription business with ballooning demand during the novel coronavirus.
Shares are trying for a weekly-up rotation over $27.75. Over puts the July high in play near $28.86. Above that and RST can gain even more momentum. Specifically, it could put $30 in play, followed by the two-times range extension near $32.
On the downside, though, I want to see the 20-day moving average continue to hold as support. Below could put sub-$24 or lower in play.
This one has been explosive. Meaning, if momentum returns it can continue higher, but if momentum turns, the selling pressure can be intense.
Top Stock Trades for Tomorrow No. 4: Penn National Gaming (PENN)
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Penn National Gaming (NASDAQ:PENN) has been a beauty. Even after its massive rally from the lows, shares consolidated in a bullish manner.
That is, the stock formed an ascending triangle, as uptrend support continued to push shares into a static level of resistance. In this case, resistance came into play near $38 to $40.
The recent breakout has sent shares toward $50. With a little more momentum, this stock could see $53.71 where it will hit the 138.2% extension. Above that puts the 161.8% extension in play near $61.
On the dip, see if shares dip back to the 20-day moving average and uptrend support. That could be a buying opportunity. Below puts prior resistance between in play $38 to $40.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret is long RST.
