Despite some strong online shopping reports, investors pared back on risk a bit in what was mostly a mixed and tame trading session on Monday. That said, let’s look at a few top stock trades as we exit November.
Top Stock Trades for Tomorrow No. 1: Apple (AAPL)
A lot of investors keep looking for Apple (NASDAQ:AAPL) to roll over. Maybe that’s because of its $2 trillion market capitalization or how well it’s done this year. To me, the recent sideways action just looks like consolidation.
Admittedly, I was hopeful we would get a dip into the mid-$90s, allowing Apple to test the 200-day moving average and fill its earnings gap from July. It would have been a great buying opportunity.
Instead, the current price action has led to a wedge formation on the charts (blue lines), allowing the stock to digest its summer gains. I now want to see shares clear wedge resistance and rotate over the November highs at $121.99. Remember, that was the rotation we were looking for a few weeks ago.
Those who remember the plan, may remember that such a rotation will put the October highs in play, up at $125.17. Above that, and Apple may retest its all-time highs near $138.
On the downside, though, I don’t want to see this name lose the 50-day moving average. If it does, it puts a small gap-fill in play near $111, followed by the November low at $107.14.
Top Stock Trades for Tomorrow No. 2: Nikola (NKLA)
Nikola (NASDAQ:NKLA) has been a volatile trade lately, something we recently discussed. In that discussion, I noted that it was hard to trust Nikola at the moment, particularly as it was struggling with the key $30 level and the 200-day moving average.
We saw why on Monday, with shares plunging nearly 27%. So, what now?
I want to see how the stock does on a retest of this $17.50 area. A close below and failure to reclaim $17.50 opens the door for even lower prices.
On the upside, however, maybe aggressive longs can chase Nikola if it gets back above and closes north of the 20-day and 50-day moving averages. In that case, it might fill the gap up toward $27.
Top Stock Trades for Tomorrow No. 3: General Motors (GM)
Part of the reason Nikola is falling on Monday is its reworked deal with General Motors (NYSE:GM). The other reason is a stock offering.
In any regard, GM stock is taking the news much better, down less than 3%.
You may remember my long-term weekly chart of GM from earlier in the month. Specifically, $42 was a very long-term resistance mark that GM cleared earlier in the month, as it ran to a high of $46.71. $38 was also notable, as both levels are highlighted on the chart.
From here, it would be healthy price action to see a dip to the 20-day moving average and/or $42 level that holds as support. A bounce will put $46-plus back in play. Above the current high puts $50 on the table.
Below $42 and the 20-day moving average simply puts $38 and the 50-day moving average in play.
Top Trades for Tomorrow No. 4: Moderna (MRNA)
Wow, what else can I say about Moderna (NASDAQ:MRNA) at this point? This name has been a total stud, exploding more than 50% in the last three days.
Friday’s rally sent shares right through the 161.8% extension, while MRNA stock gapped up over the two-times range extension on Monday. From here, it’s stuck between the two extensions, as bulls take some profit near $150.
Remember, it’s always prudent to take some profit, at the very least, on moves like this.
If it continues higher, the 261.8% extension comes into play near $161. If shares take out Monday’s low, the two-times range extension is in play near $136. Below could put $120 on deck.
Top Trades for Tomorrow No. 5: S&P 500 ETF (SPY)
I’ve been seeing a lot of bearish takes on the stock market lately. That’s despite the markets holding up near record highs and in lieu of the rather bullish sentiment we’re seeing (which is not a positive in the short term).
We don’t like when things get too bullish, but let’s not get too bearish simply because investors are feeling good.
Remember, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) broke out over wedge resistance (purple line) in early November and stumbled its way to new all-time highs throughout the month.
It’s always possible we unwind a bit more from here, but as of now, all we have is a pullback to and bounce from the 10-day moving average. With an RSI below 70 — and barely over 60 — it’s hard to call this market too frothy.
A break of the 10-day is more concerning in the intermediate term. However, even then it will just put the October highs and 20-day moving average on the table. Below $350 is again more concerning, but short of a move through the 50-day moving average, I’m not going to panic.
If you want to talk about extensions — from the September low to the August high — the 138.2% comes into play at $373.63 and the 161.8% extension comes into play near $383.
On the date of publication, Bret Kenwell held a long position in AAPL.