After opening lower on the day, bulls seized control on Thursday. With that in mind, let’s look at a few top stock trades for Friday.
Top Stock Trades for Tomorrow No. 1: Nasdaq ETF (QQQ)
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Wednesday’s selloff was clear as day. The Nasdaq Composite was butting up against resistance on multiple timeframes, and failing to reclaim key areas that would shift control back in bulls’ control.
However, after opening lower (and with the Nasdaq futures retesting this week’s low), it was able to reverse higher. Now the question becomes, is this the bottom or just another bear rally?
Here is a chart of the Nasdaq, but feel free to draw similar extrapolations to the Invesco QQQ ETF (NASDAQ:QQQ). The reason this week’s dip was obvious? That’s the trend.
Longer term we are currently in a bull trend. But short term, this is a corrective phase. The 10-day moving average has been resistance (blue circles), while the 50-day turned from support to resistance too. Rallying into both on Tuesday afternoon set the Nasdaq up for a decline.
Now the index is struggling to regain the August low, after going monthly-down on Wednesday by closing below last month’s low. From here, bulls needs to see the index reclaim the August low by closing above it. That could set up a nimble trade toward the 10-day moving average and potentially the 50-day moving average.
I would be hesitant to be aggressively long as a trader until the Nasdaq can reclaim both levels. Below this week’s low (at 10,519.50) and the 100-day moving average is in play and potentially 10,200.
Top Stock Trades for Tomorrow No. 2: Costco (COST)
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I will try to make these a little shorter, as the Nasdaq breakdown was a bit lengthy. For Costco Wholesale (NASDAQ:COST), the retailer will report earnings after the close.
The stock is trading pretty well, holding the 50-day and 10-day moving averages, while hovering just below resistance near $350.
On a bullish reaction, bulls want to see a rotation over $350 and up toward $360. That’s around where COST topped out earlier this month. Above its all-time high could put the two-times range in play up near $377.
On the downside, I would like to see $330 hold as support. Below puts Costco below the 50-day moving average, this week’s low, last week’s low and the breakout level from July. A sub-$330 move puts the 100-day moving average in play.
Top Stock Trades for Tomorrow No. 3: Boeing (BA)
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Shares of Boeing (NYSE:BA) are breaking down. The stock is rotating below the August low and the 23.6% retracement.
Short of reclaiming these two marks, Boeing could remain under pressure. I don’t know that it will get down to $120, but that would be a meaningful area on the chart.
That is also about where the 138.2% extension comes into play, measuring from the June high to the August low (so measuring from high to low, rather than from low to high).
The 161.8% comes into play near $103, although that would require a real breakdown and I don’t know if the catalysts are in play to get Boeing there.
Keep an eye on $150. Above is more constructive, below not so much.
Top Stock Trades for Tomorrow No. 4: Lam Research (LRCX)
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Lam Research (NASDAQ:LRCX) has shown a fair amount of relative strength thus far. The stock climbed 3% on the day with the Nasdaq wavering.
It’s also reclaiming its 10-day and 20-day moving averages. With today’s rally, shares filled the recent gap from earlier this month. Now things get a little trickier as a result.
If Lam can continue higher over today’s high at $334.18, then it puts the 50-day moving average in play up near $347. Above that could put $360 in play.
On the downside, short-term bulls don’t want to see LRCX lose the 10-day moving average. Below puts this week’s low on the table at $300.70, followed by this month’s low near $292.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
