Stimulus talks continue to drive the stock market, in what is becoming a choppy and frustrating environment for traders. With that in mind, let’s look at some top stock trades to see if we can gain any clarity.
Top Stock Trades for Tomorrow No. 1: Snap (SNAP)
However, is the rally a bit too strong?
With this big of a move, it’s hard for traders to navigate a new position. On the upside, the stock came within six cents of its 261.8% extension — providing a good exits for longs who owned Snap into the print.
From here, let’s see if the stock close above this mark, opening the door to $40-plus and the three-times range up at $43.49.
Top Stock Trades for Tomorrow No. 2: Facebook (FB)
Snap’s results had a positive impact across the social media space, including on Facebook (NASDAQ:FB).
Facebook is set to report earnings next week, but Snap’s report could get momentum working in bulls’ favor.
The stock is jumping higher by about 4% to 5% on the day. The rally helped propel shares over the 50-day moving average, which had been resistance in each of the past four trading sessions.
However, FB stock now finds itself contending with the $280 level, a notable level over the past few months. If shares can clear this zone and Wednesday’s high at $283.05, then it’s possible that the stock will retest the $300 mark. Above that could put the two-times range extension in play near $311.
On the downside, though, bulls will want to see the 50-day moving average hold as support.
Top Stock Trades for Tomorrow No. 3: Pinterest (PINS)
Pinterest (NYSE:PINS) also caught a jolt higher on Snap’s results. Then a pair of positive analyst reports helped spur it even higher on Wednesday.
While shares have faded from the highs a bit, the stock was up almost 15% at one point.
In late July, Pinterest stock enjoyed a huge gap higher on strong earnings results. From there, we had some choppy range trading as the stock consolidated its gains. In September, we got a breakout from that range into the next formation, which was an ascending triangle.
That’s a bullish technical pattern where rising support (blue line) squeezes a stock against a static level of resistance. In this case, resistance was at $45. Shares are now clearing that level and climbing into the $50s.
I don’t really want to see PINS stock lose $47.50, otherwise it opens the door to a gap-fill down toward $46. Above Wednesday’s high puts the 261.8% extension in play near $55.
Top Stock Trades for Tomorrow No. 4: PayPal (PYPL)
PayPal (NASDAQ:PYPL) shares are trading higher as the company announces its move into digital currencies. The rally is enough to send the stock up to new highs, but is it enough to trigger a breakout?
It’s interesting that PYPL can hit new highs without triggering a breakout, but that’s exactly what we have.
This $205 to $212 area has been a steady area of supply for PayPal. Bulls’ hope is that shares can clear this area, allowing it to turn into a level of demand (or support).
If PayPal can clear this zone with authority, it may put the $235 level in play, which is the 361.8% extension. On the downside, I don’t want to see PayPal break $200.
On the date of publication, Bret Kenwell held a long position in PINS.