Equities burst to new all-time highs across the board on Wednesday, as investors eagerly snapped up stocks. Can the run continue? That said, let’s look at some top stock trades.
Top Stock Trades for Tomorrow No. 1: Netflix (NFLX)
We have been talking about disappointing FAANG stocks for weeks now, or maybe it’s been months. Regardless, this group has been stagnant until Wednesday when Netflix (NASDAQ:NFLX) came roaring back to life.
Ahead of the open, I flagged the big $575 level and said shares need to push through this mark or risk a decline back down toward $545. It took a few hours, but Netflix eventually pushed through this mark.
Now, we need to see the stock find $575 as support. It’s very constructive when prior resistance turns to support. A move over $600 could put the $647.50 mark in play, which is the 161.8% extension.
While that would be a big rally, keep in mind that the stock hasn’t gone anywhere in almost six months prior to Wednesday’s rally.
Top Stock Trades for Tomorrow No. 2: Ford (F)
I am in awe by the sudden premium that bulls are willing to assign the automakers. It’s probably because Tesla (NASDAQ:TSLA) became one of the largest companies in the world. But, regardless of the explanation, Ford (NYSE:F) is feeling the love too.
Shares are hitting new 52-week highs, which is pretty crazy considering Ford was out of favor before the novel coronavirus was even a thing.
In any regard, I would love to see the stock base above the $10.50 level, allowing it to rest before its next push higher. Investors can use a longer term price target of $13, which is roughly the 161.8% extension from the 2020 range.
If Ford loses the $10.50 level, it’s not the end of the world. But I would like to see the 10-week and 200-week moving averages buoy the stock from there.
Top Stock Trades for Tomorrow No. 3: UnitedHealth (UNH)
UnitedHealth (NYSE:UNH) isn’t giving investors a lot to work with after reporting earnings, ending Wednesday basically flat on the day. However, that’s better than way down.
I love the defined-risk setup we have in UNH stock right now. Shares dipped lower on the day, but found support at last week’s low and the 50-day moving average. This convergence of support gives bulls a level to measure against on the downside.
Should it break, the 100-day moving average and $330 level could be in play.
If it holds, though, look for UNH to reclaim the 10-day moving average, then this week’s high near $357. Above the latter, and the double-top resistance mark near $368 is on the table — with the 161.8% extension near $380 in play above that.
Top Stock Trades for Tomorrow No. 4: QQQ ETF (QQQ)
While the market feels overdone to a lot of traders, we have solid sector rotation in play that has been keeping the indices propped up. However, that doesn’t mean we can’t be exposed to a short-term dip.
Will the Invesco QQQ ETF (NASDAQ:QQQ) be vulnerable? It could be — unless we continue to see a rotation into FAANG stocks. That could be what props up the ETF and largely speaking, the market, given how quiet this group has been over the past few months.
In regards to the QQQ, as long as it holds the 10-week moving average, it’s hard to get overly bearish. I will say though, the 161.8% extension from that sharp September correction comes into play near $330, which isn’t far from current levels.
That could act as a short-term top should we get there.
Longer term, It’s hard to rule out a move to $350-ish, which is the 261.8% extension from the Q1 2020 correction. However, there could be some turbulence along the way. So this is your reminder to not be complacent with your holdings and to not let your ego do the trading.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.