Labor Day will keep U.S. equity markets closed on Monday, making Tuesday Sept. 8 the first trading day of next week. With that in mind, let’s look at a few top stock trades ahead of a long three-day weekend.
Top Stock Trades for Tuesday No. 1: Tesla (TSLA)
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The volatility over the last few days has been palpable and Tesla (NASDAQ:TSLA) is target No. 1 for many traders.
After a couple of tough days shares are finding buyers — a pullback of which doesn’t look bad at all amid the current run, even though shares fell more than 25% from the peak to the recent low.
The 261.8% extension and 20-day moving average are acting as support, while the 10-day moving average is acting as resistance. We need to see which one of these levels gives way and if we can see a continuation in the direction of that break.
On a break of the 20-day moving average and 261.8% extension, let’s see if Tesla takes out Friday’s low at $372.02 and closes below it. If so, it puts the 50-day moving average and breakout level near $330 on the table.
Above the 10-day moving average and three-times range extension, could put $500 back on the table.
Top Stock Trades for Tuesday No. 2: Dow Jones ETF (DIA)
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The Dow Jones Industrial Average has not kept pace with the S&P 500 and Nasdaq Composite, although it’s trying to hold up. A look at the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) shows the ETF butting up right into its highs from February.
While also enduring a quick selloff, it’s finding support at the 20-day moving average.
Keep it simple from here. On a daily-up rotation above Friday’s high puts a run back toward $290 and the current high in play.
Below the 20-day moving average and Friday’s low (at $277.01) puts the 50-day moving average on the table. Below that and — yep, you guessed it — the 200-day moving average is up next.
Top Stock Trades for Tuesday No. 3: Bank of America (BAC)
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Interestingly, the banks have been showing some strength as of late, even in the face of the recent decline. Among investors’ favorite is Bank of America (NYSE:BAC), which ended Friday up more than 3%.
In any regard, the stock is reclaiming the 200-week moving average on the move, after finding the $25.50 level to be support. This key level is a notable development and leaves BAC open for a test of the 50-week moving average.
This mark has been resistance both times it has been tested since the novel coronavirus selloff. A move over it puts the June highs in play near $28.80. Above that and $30 is on the table.
On a decline back below $25 creates a problem, as it puts BAC below several key levels and uptrend support (blue line).
Top Trades for Tuesday No. 4: JPMorgan (JPM)
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JPMorgan (NYSE:JPM) has a similar setup to BAC, clearing that key $102 area and trying to press higher. Also like BofA, the 50-week moving average has been resistance so far since the selloff.
On a rotation through last month’s high (at $106.43) and the 50-week moving average will again be the target. It also puts the $112 level and the June highs in play at $114.65.
A break of $100 will put the 10-week and 20-week moving averages on the table. Below them and traders will likely wait for a better setup.
Top Trades for Tuesday No. 5: Smith & Wesson (SWBI)
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Smith & Wesson (NASDAQ:SWBI) shares are struggling on Friday after reporting earnings on Thursday evening.
The stock is now working on its third straight decline and at Friday’s low, was down almost 24% from its 2020 high made on Wednesday.
Now what? If the stock closes below the 50-day moving average, it puts a decline down to the $15.50 to $16 area. There it finds the 61.8% retracement of the 2020 range and recent uptrend support (blue line).
On the upside, I want to see SWBI reclaim the 50-day and 20-day moving averages. Above puts $20 back in play, followed by resistance near $21.50 and then the 2020 high at $22.40.
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.
