It’s a Fed day and Opex week, but that doesn’t seem to be slowing down the bulls. In fact, the Fed just said it will remain relatively accommodative for the foreseeable future. That said, let’s dig through some top stock trades as we approach Thursday.
Top Stock Trades for Tomorrow No. 1: iQiyi (IQ)
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iQiyi (NASDAQ:IQ) is being sold hard on Wednesday, down nearly 19% on the day, as it looks to raise more capital.
The decline sent shares tumbling below the 200-day moving average and key $21 level. That came after the 100-day moving average was clearly acting as resistance (blue box).
Now, the stock is at the Q3 lows.
If this level fails to hold, $15.50 to $16 could be in the cards. If it holds though, look for a possible bounce back up to $20, then the 200-day moving average.
While this feels like somewhat of an overreaction, the charts have a line in the sand. See how it handles that Q3 low.
Top Stock Trades for Tomorrow No. 2: Baidu (BIDU)
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Interestingly, Baidu (NASDAQ:BIDU) isn’t down on the day. In fact, it was up big despite it being a majority stakeholder in iQiyi.
However, this one has been quite hot and may finally be losing some of its steam as it’s rejected off the $200 level. From here, I’d love to see the 200-week moving average hold as support.
If it can do that, it will bode well for bulls and puts a retest of $200 in play. Above $200, and the $208 to $210 area is in play. Above that, and it could be off to the races.
On a close below the 200-week moving average, the 10-week moving average could be up next. While a test of $150 would be discouraging, it would technically leave BIDU stock in good shape provided it holds as support.
Top Stock Trades for Tomorrow No. 3: DraftKings (DKNG)
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We have loved DraftKings (NASDAQ:DKNG) since it broke out of that falling wedge (blue lines) in early October. However, it wavered last week, with plenty of volatility.
Over the last five days though, it’s been holding the 10-day moving average, with Wednesday’s jolt sending it to the weekly- and monthly-up rotation point near $53.75.
A move over this mark could put $56.50 in play, completely filling the October gap. That would be followed by a possible push toward $60, with the all-time high at $64 possible above that.
A break of the 10-day moving average and close below this week’s low at $49.77 would not bode well for bulls.
Top Trades for Tomorrow No. 4: Rite Aid (RAD)
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Rite Aid (NYSE:RAD) fell out of favor after topping out in July, but has found some recent momentum since the November low. Can it maintain that momentum after it reports earnings on Thursday?
I love the technical setup on this, which comes after a surge from sub-$10 up to $20, followed by a pullback to the 10-day moving average. If a binary event — earnings — weren’t on the table, this would be an easier dip to buy.
The roadmap is clear with this one, though. On a dip, see how RAD stock reacts to the $13 to $14 area and the 200-day moving average.
On the upside, look for RAD stock to clear $19 and preferably, go weekly-up over $20.32. Above puts last December’s high in play near $24, followed by the 200-week moving average near $27.30.
Top Trades for Tomorrow No. 5: General Mills (GIS)
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General Mills (NYSE:GIS) will also report earnings on Thursday, and the stock hasn’t looked great.
Notice the way it’s holding the March highs ahead of the event. On a bearish reaction below this level and wedge support, the stock will quickly face the November low just above $57.
Below the November low puts the September low on the table at $56.45. Below that and the selling can continue.
On the upside, however, we need to see GIS stock clear its key moving averages and wedge resistance near $61. Ideally, though, it can give us a monthly-up rotation over the November high at $62.36. That puts $65 resistance on the table.
On the date of publication, Bret Kenwell held a long position in DKNG.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
