After Tuesday’s volatile finish, stocks got off to a hot start on Wednesday and continued to plow higher. That said, let’s look at a few top stock trades for Thursday.
Top Stock Trades for Tomorrow No. 1: DraftKings (DKNG)
DraftKings (NASDAQ:DKNG) was on fire for a while, rallying from $35 in early September to almost $65 a few days ago.
To see shares unwind a bit isn’t surprisingly, particularly with the company pricing 32 million shares at $52 apiece in a secondary deal.
Bulls might not let the dip last long, though. With more cash in its coffers, DraftKings has more balance sheet power, while its stock is digesting the news well. I wouldn’t be surprised to see this name climb higher if it can take out the 161.8% extension up near $55.50.
At the same time, DraftKings has also provided a recent update to its Q3 outlook, which came in slightly ahead of consensus estimates. Does that remove a catalyst for the bulls? Seems like it.
In any regard, let’s watch two levels. On the upside, keep an eye on the 161.8% extension and the gap-fill area around $56.75. Above opens the door to $60-plus.
On the downside, though, watch the 20-day moving average and Wednesday’s low at $52.20. Below opens the door to $50, then $47.
Top Stock Trades for Tomorrow No. 2: Salesforce (CRM)
However, the early-September selloff in tech didn’t spare CRM, as shares came under pressure. That dip ultimately formed what’s known as a falling wedge pattern (purple lines), where bulls look for an upside breakout over the range.
Late last month they got the breakout they were looking for, as shares quickly reclaimed the 20-day moving average and began to hold this mark as support. With Wednesday’s weekly-up rotation over last week’s high, the stock is moving quite well.
On the downside, be cautious on a close below last week’s high at $255.44. Below the 20-day moving average and the 50-day moving average is likely in play.
On the upside, however, the two-times range extension is in play near $276, followed by the all-time high at $284.50.
Top Stock Trades for Tomorrow No. 3: Levi Strauss (LEVI)
At one point, shares of Levi Strauss (NYSE:LEVI) were up more than 14% on the day after better-than-expected earnings. Unfortunately though, the stock opened significantly higher, climbed just 4 cents higher in the opening minutes and has been under pressure since.
Now the $16.50 to $17 area is very clear resistance.
On the downside, let’s see if Levi stock can hold the pre-earnings high at $15.27. So far it is. If it doesn’t, look to see how it handles the 200-day moving average. Below that and there is not much momentum working in bulls’ favor.
On the upside, though, we really need to see Levi clear the $16.50 to $17 area. It’s resistance until proven otherwise.
Top Stock Trades for Tomorrow No. 4: Russell 2000 ETF (IWM)
Don’t look now, but small caps have been performing quite well and even outperforming the other major indices. The downside? The iShares Russell 2000 (NYSEARCA:IWM) has been lagging over the long term.
With the IWM’s strong rally this week — up about 4.5% — it’s clearing multi-month highs left and right. It’s now at its highest point since late February and also clearing range resistance from 2019 near $155.
From here, let’s see if the IWM can push up into the $168 to $170 area. Above could trigger a breakout for the index, which has lagged some of its larger-cap peers for a while now. Initially, a breakout would put the 123.6% extension in play at $188.23.
On the downside, however, a decline below $155 and the 10-week moving average, puts the 50-week and 200-week moving averages on the table near $146.
On the date of publication, Bret Kenwell held a long position in DKNG.