The S&P 500 hit new all-time highs on Tuesday. And while traders begin to fear an overbought market, there hasn’t been anything concerning enough to derail the recent rally. With that in mind, let’s look at a few top stock trades going into mid-week.
Top Stock Trades for Tomorrow No. 1: Fastly (FSLY)
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Last week, Fastly (NYSE:FSLY) shares exploded higher, but topped out near $97 and gave back most of its gains on the day.
I said the stock needed to hold up near its 50-day and 100-day moving averages if it wanted to be okay on the long side. It did just that on Monday, before rocketing higher on Tuesday.
Tuesday’s rally sent Fastly rotating over last week’s high, as it pushes $100 and fills in some of that massive gap from October. From here, we need to see some continuation.
Ideally, FSLY stock will be able to hold up over last week’s highs at $97.19. Below, and it technically puts those key moving averages back in play. On the upside, though, let’s see if it can fill in more of this gap up toward $120.
Top Stock Trades for Tomorrow No. 2: Toll Brothers (TOL)
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Toll Brothers (NYSE:TOL) is tipping lower on earnings, falling about 8% on Tuesday.
The 100-day moving average has been pretty solid support going back to May. And as TOL stock dips into this mark now, let’s see if it again holds as support. If it does, look for a bounce over the 50-day moving average and back up toward $50 resistance.
If the 100-day moving average fails as support, look for support in the $40 to $41 area. Below that will open up the stock to a test of the 200-day moving average.
While housing and Toll Brothers specifically has been hot, look for price to confirm what’s going on. If the market doesn’t want Toll anymore, you’ll know.
Top Stock Trades for Tomorrow No. 3: AutoZone (AZO)
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AutoZone (NYSE:AZO) is also tipping lower on earnings, down almost 5.3% on the day.
The stock has been putting in lower highs since early September, as sellers continue to grind it lower. But now we have a problem.
Shares are not only losing support near $1,100, but AZO stock is also losing the 200-day moving average.
That doesn’t bode well for buyers, particularly if the stock loses the June low near $1,075. That could put $1,000 in play.
From here, I need to see AZO stock reclaim $1,100 and the 200-day moving average. Below creates too many concerns for me at this point. If it can do that, look for a rally back toward the 50-day and 100-day moving averages.
Top Trades for Tomorrow No. 4: Campbell Soup (CPB)
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At first glance, this is the most “blah” chart we’ve had on here in a while, which belongs to Campbell Soup (NYSE:CPB).
The stock has done a whole lot of nothing for several quarters, as it bobs around its key moving averages. However, with earnings due up on Wednesday morning, I think we can watch a few key levels.
First and foremost, we need clarity on what these moving averages represent: Are they support or resistance?
That question will be answered tomorrow with CPB stock either closing above the cluster at $48.72 and making them into support, or closing below them and solidifying them as resistance.
If it’s a bullish reaction, see how CPB stock handles $51, which is the approximate high from this month. Above opens the door to $53, which is multi-quarter resistance.
On a bearish reaction, however, see if support comes into play at last month’s low, near $45.50. Below puts $44.50 in play, the third-quarter low. A close below that that doesn’t result in a quick reclaiming opens the door to the March low near $40, although I don’t expect that outcome.
On the date of publication, Bret Kenwell held a long position in FSLY.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
