Stocks caught a pre-election bump on Tuesday, as investors gobbled up equities ahead of the results. The rally likely surprised a number of investors, but many question its sustainability. With all of that in mind, let’s look at a few top stock trades going into Wednesday.
Top Stock Trades for Tomorrow No. 1: PayPal (PYPL)
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Shares of PayPal (NASDAQ:PYPL) ended Tuesday down more than 4%, but opened lower on what investors apparently decided were disappointing earnings.
I happen to like the story at PayPal, but I’m not one to fight the price action. Uptrend support (blue line) is holding for now, but the stock is struggling to reclaim the 100-day moving average.
From here, I want to see PYPL reclaim both the 50-day and 100-day moving averages. If it can, look for a move up to $200 and possibly a retest of $210 resistance.
If it can’t reclaim the 100-day moving average, though. see if uptrend support continues to hold. Below puts the September low in play at $171.63, followed by $160 and the 200-day moving average.
Top Stock Trades for Tomorrow No. 2: Comcast (CMCSA)
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Comcast (NASDAQ:CMCSA) stock is rallying on news it will distribute smart TVs with Walmart (NYSE:WMT). However, that doesn’t mean the chart looks great.
Up about 3% on the day is decent, but bulls really need to see the stock reclaim the 100-day moving average — which has been resistance for more than a week. It also needs to reclaim prior channel support (blue line).
Above opens the door to the 50-day moving average and prior channel resistance.
On the plus side, the risk levels are quite clear. $41.75 has been support over the last week, with one slip down to $40.97. A close below this level is a problem. It would put Comcast below a multi-month low, the 200-day moving average and the 61.8% retracement.
Top Stock Trades for Tomorrow No. 3: Roku (ROKU)
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Of course, Roku (NASDAQ:ROKU) stock did not handle the Comcast TV news well, with shares dipping more than 1% on the headlines. In reality, that seems silly given Roku’s dominance in the streaming world.
In any regard, it’s enough to send the stock back below $200 and toward the 50-day moving average. Without the election risk, this would be a slam dunk buy-the-dip opportunity for traders.
Maybe it is for investors, but the short term is just too muddy for many to be in a risk-on state. If the 50-day holds as support, look for a rotation back up through $200. Above downtrend resistance (blue line) and the $240 highs are back in play.
A break of the 50-day moving average puts the prior all-time highs from 2019 in play near $176, followed by the 100-day moving average. A real flush lower could put Roku back toward $150 and the 200-day moving average, but that would likely be accompanied by a notable breakdown in the overall market.
Top Trades for Tomorrow No. 4: Alibaba (BABA)
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Alibaba (NYSE:BABA) was trading so well ahead of earnings on Nov. 5 and Single’s Day on Nov. 11.
That was until Ant Group put a halt on its Chinese-listed IPOs, sending Alibaba down by 8% (as the latter has a stake in the former).
However, uptrend support is holding strong, nearly to the penny. In play since July, I have respect for this mark. If it holds, we need to see BABA reclaim the 50-day moving average, which rejected Alibaba on Tuesday.
Above the 50-day puts $300 back in play, followed by a gap-fill up toward $310. A close below uptrend support puts the $267 to $270 area on the table, along with the 100-day moving average.
Top Trades for Tomorrow No. 5: SolarEdge Technologies (SEDG)
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SolarEdge Technologies (NASDAQ:SEDG) has been roasting higher, climbing from sub-$70 in March to more than $300 a few weeks ago. However, shares had been retreating considerably since mid-October, before plunging nearly 23% on Tuesday.
After opening below the 50-day moving average and $230, SolarEdge is trying to find its footing near $200 and the 100-day moving average.
After this move and with the election on the table, SEDG is too risky for many traders and that’s understandable. However, if it can hold over $200, bulls may be able to make a stand.
Over Tuesday’s high, and $230 and the 50-day moving averages are the next upside targets. A close below $200 puts $180 in play, a significant level from September, followed by the 200-day moving average.
On the date of publication, Bret Kenwell held a long position in ROKU.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
