After a bumpy reversal on Monday, it was a quiet day in the markets on Tuesday. Let’s look at a few top stock trades ahead of the last full trading day in 2020.
Top Stock Trades for Tomorrow No. 1: Shopify
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Shopify (NYSE:SHOP) has been range-bound for months, chopping between $1,100 on the upside and $875 on the downside.
Last week, Shopify broke out over range resistance and cleared the prior high from September at $1,146.91. That level then acted as support on Monday.
I find it to be a very bullish development when prior resistance or a prior high acts as support.
The stock is extending from that level now, up more than 6.5% as of this writing. Investors have their targets set up for a move toward $1,336.95, where the stock will find its 161.8% extension. Above that could put the two-times range extension in play near $1,454.
Top Stock Trades for Tomorrow No. 2: Walmart
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Walmart (NYSE:WMT) is getting sold on Tuesday, dipping to a one-month low.
The stock is in the midst of a falling wedge setup, a pattern that is still intact. Aggressive bulls may be looking to buy at wedge support (blue line). That’s fine if it’s within their trade parameters.
For me, I’m either looking for a deeper dip — like the 100-day moving average — or a break over wedge resistance.
Above wedge resistance, investors will look for WMT to clear the 50-day moving average and this week’s high. Above that and $150 is back on the table.
On the downside, a break of the 100-day moving average puts the November low in play near $138, followed by the reversal low from October at $136.87.
Top Stock Trades for Tomorrow No. 3: GameStop
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GameStop (NYSE:GME) has been an interesting trading vehicle lately.
The stock was trading really well ahead of earnings, then dipped hard following the results. Shares chewed their way back higher, climbing through the key $16 level.
With today’s igniting action, GME is pushing through the prior high from November at $19.42.
If it can’t hold above $19.42, bulls need to see the $16 to $16.64 area hold as support. If GameStop can continue higher and take out the new high at $20.04, see if it can get a rotation up to the 161.8% extension at $23.92.
Top Trades for Tomorrow No. 4: Facebook
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I’m still waiting for big tech to get a move on, but Facebook (NASDAQ:FB) is not among the group that’s looking healthy.
Instead, shares are cracking below the 100-day moving average and wedge support. Unless this area is reclaimed — for instance, by the end of this week — more downside may be in the cards.
Ultimately on the upside, we need to see a move back above the $280 area.
Further selling pressure could send FB stock down to the November low around $257. Below that and, technically speaking, the 200-day moving average is possible.
On the date of publication, Bret Kenwell held a long position in SHOP.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
