The S&P 500 and Nasdaq Composite quietly hit new highs again on Thursday, as bulls continue to inch the indices higher. With that in mind, let’s look at a few top stock trades for Friday.
Top Stock Trades for Tomorrow No. 1: Snowflake (SNOW)
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Snowflake (NYSE:SNOW) reported its first quarterly results as a public company and Wall Street is gobbling up the stock in response.
The move sent shares back to the all-time highs, as Snowflake flirts with a larger breakout. However, shares were rejected by those highs on Thursday.
Now, we have an interesting setup. I want to see shares clear the $340 area and the 161.8% extension (from the November low to the October high), at $344.89. Above that opens the door to the two-times range extension at $372.02.
On the downside, however, I want to see Snowflake continue to hold the 10-day moving average. Below puts the low from Wednesday and Thursday in play, near $290. A close below that puts the breakout level in play near $270, followed by the 50-day moving average.
Top Stock Trades for Tomorrow No. 2: American Airlines (AA)
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American Airlines (NASDAQ:AAL) hit its highest level since June, bursting higher by about 8% on Thursday.
The stock has been trading well lately, but the route has been bumpy — or should we say, the flight has been turbulent.
Poor puns aside, I want to see this name hold up over $15. Below puts $14 back in play, which was resistance in August and November. If AAL stock drops below those marks in a hurry, then it will put a cluster of key moving averages in play between $12.75 and $13.50.
On the upside, though, look for a move above the 38.2% retracement at $16.86. Above puts $19.50 in play, near where the 50% retracement comes into play. Above that, and the June high could be on the table, at $22.80.
Top Stock Trades for Tomorrow No. 3: Lemonade (LMND)
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Lemonade (NYSE:LMND) has been trading quite well since bottoming in late October. The stock bursted through $70 on the day, and even cleared $80 in the process.
$80 was resistance in August, October and November — despite the temporary breakout in the last of these three months.
So, what now?
I would love to see the stock press up toward $90, which seems doable given how strong the stock was today. Above $90 puts the highs in play near $95, followed by the obvious target of $100.
However, even more than pushing up to $90, I would love to see the stock hold the $75 to $77.50 area. The latter is the weekly- and monthly-up level. Maintaining above that area bodes well for the bulls and may allow Lemonade enough time to rest and rehydrate before pushing higher.
Top Trades for Tomorrow No. 4: DocuSign (DOCU)
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DocuSign (NASDAQ:DOCU), my favorite pandemic play, is due to report earnings. This name has been hot in 2020, but has been consolidating its gains since July.
Typically I would say a bullish trade, followed by five months of consolidation bodes well for investors.
However, we just saw another pandemic play — Zoom Video (NASDAQ:ZM) — report stellar results earlier this week and selloff despite that fact.
Making it even harder is the weekly-up rotation we’re getting in DocuSign, and the move over its key moving averages and wedge resistance (blue line).
On a bullish reaction, look to see if DocuSign can push through the monthly and two-times monthly-up rotation near $250. Above that could put the all-time high in play near $290.
On the downside, though, look for DOCU stock to hold the $209.11 mark — the December low. Below that level puts the stock below wedge support, as well as its key moving averages. That could put range support on the table near $190.
On the date of publication, Bret Kenwell held a long position in DOCU.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
