Talk about making it an interesting jobs report. While the trend still favors the bulls, bears shook the S&P 500 for some solid losses on Thursday. Let’s see how the market shapes up on Friday, when the monthly labor report is released. Until then, though, let’s look at some top stock trades.
Top Stock Trades for Tomorrow No. 1: Apple (AAPL)
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Apple (NASDAQ:AAPL) has been the face of the latest rally, but shares weren’t spared on Thursday. The stock ended the day down 8%, and plunged right through its 10-day moving average and the 261.8% extension.
In all honesty, good. This stock has been too hot, climbing as much as 43% since reporting earnings. I say that being a huge fan (and customer of Apple) and having owned the stock for most of the past decade.
For now, shares are finding support at the 20-day moving average. A close below this mark could put the two-times range extension in play near $110, along with the 50-day moving average.
Truthfully, I’d love a real shakeout, like something down toward $100 or even the June breakout in the low-$80s. That would ruffle some feathers, but give longer term investors a great buying opportunity.
On the upside, look to see if and when Apple can reclaim the 10-day moving average. Above puts the current high and three-times range extension in play.
At the very least, the dip helped to unwind Apple’s overbought condition.
Top Stock Trades for Tomorrow No. 2: QQQ ETF (QQQ)
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As Apple gets hit, so too does the Invesco QQQ ETF (NASDAQ:QQQ). Shares ended Thursday down 5%, and are struggling to hold the 10-day moving average.
Well, in this case “struggling” is a nice way of saying failing. If it closes below this mark, it puts the $280 to $282 area in play. This is where the QQQ finds the 161.8% extension, 20-day moving average and uptrend support (blue line). On a break of this area, the 50-day moving average is on the table.
Really though, the QQQ could correct all the way down to $240, or the highs from February. While it would feel like the world is ending, the technicals would still be pretty healthy — with the exception of the then-shattered trend.
Let’s not get overly bearish here just because of one day of trading. All of the sharp dips over the past few months have been buying opportunities. If we lose the 20-day moving average, then it’s time to pay attention.
On the upside, look for a move back over $300.
Top Stock Trades for Tomorrow No. 3: Macy’s (M)
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Macy’s (NYSE:M) struggled with the 23.6% extension and $7.55 area on Wednesday despite its post-earnings volatility. There’s little doubt in the bulls today, though.
Shares are up almost 8% in the face of a violent decline, (which perhaps puts even more weight into the move). With Thursday’s rally, Macy’s is clearing a multi-month high and turning investors’ attention to the upside.
Specifically, I am looking up to the 200-day moving average and 38.2% retracement at $9.52. Above these marks and the June high is in play at $10.46.
While the chart looks great, it’s going to be hard for a beaten-down retailer to outperform if the broader markets start to get hammered. If Macy’s loses the $7.50 mark, I would be more cautious. Below that and the 50-day moving average has to hold, along with uptrend support (blue line).
Top Trades for Tomorrow No. 4: Carnival (CCL)
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Another surprising relative strength name? Carnival Cruise (NYSE:CCL). Shares ended the day on Thursday up 5%, but are down notably from the session highs.
Like Macy’s, it’s hard to imagine this stock outperforming should the markets come under severe pressure. However, if the correction is short-lived, this name could show relative strength.
I would feel more comfortable if the stock held up over $17.50 and closed over the 23.6% retracement at $18.08. Otherwise, we could get another test of the 20-day and 50-day moving averages, and uptrend support (blue line). Investors will likely buy the dip on a decline to this zone — and why shouldn’t they? The risk/reward will be decent.
However, a close below this area opens the stock up to a test of the August low at $12.83.
Above Thursday’s high (at $18.74) could put the 200-day moving average and 38.2% retracement in play near $25. That level also coincides with the June high.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
