Day trading is incredibly difficult. Ask any full-time trader and they’ll tell you just how difficult it can be. It requires a ton of focus, flexibility and extreme discipline. Investors must also be in tune with which short-term stocks are worth focusing on.
While many small-cap stocks can act as “flash in the pan” trading candidates, they are not consistent trading stocks for short-term investors. At times, these can be cannabis stocks. Other times its SPACs, Reddit short-squeeze holdings or some of the smaller EV plays. While these stocks can make giant moves in both directions in a short period of time, they lack the consistency.
That’s not to say our ideal short-term stocks are always in play or fit perfect trading conditions. However, they allow enough consistency to remain on the radar.
Popularity among retail and professional traders ensures high volume, which gives traders great liquidity in the stock and the options markets. Further, with these stocks under constant watch, it all but ensures there won’t be any “funny business.”
Let’s look at a few favorite short-term stocks when it comes to trading:
- Apple (NASDAQ:AAPL)
- Nvidia (NASDAQ:NVDA)
- Advanced Micro Devices (NASDAQ:AMD)
- Tesla (NASDAQ:TSLA)
- Nio (NYSE:NIO)
- FuboTV (NYSE:FUBO)
- Roku (NASDAQ:ROKU)
Short-Term Stocks to Watch: Apple (AAPL)
Apple finally seems to be getting its mojo back. Like many mega-cap tech stocks, this one has been consolidating for months now. That’s after its explosive move at the end of summer finally came to an end.
There have been some decent trading setups in Apple in the months since, but nowhere near what we usually see. Consolidation phases are incredibly healthy for longer-term investors. However, they can be frustrating for traders, as there tends to be more false breakouts and an overall lack of momentum.
Lately though, the stock has been finding its groove. Perhaps it’s as earnings approach later in April. Maybe investors feel the consolidating has lasted long enough (particularly after the robustness of its last quarterly result). Throwing in a product announcement on April 20 helps too.
Either way, getting Apple back in play will be a huge improvement. With its $2.23 trillion market capitalization, it holds an important influence over the market. That’s true both for its size and impact on specific funds, as well as the psychological impact on traders.
In any regard, getting Apple back into a tradable state will be a welcomed change among day traders.
Just ahead of Apple on that timeline is Nvidia. Like Apple, Nvidia has been consolidating for months on end. It gave bulls a new high in February, but the rally was short-lived as tech stocks came under duress.
Following the company’s GTC Keynote and guidance update, the stock has enjoyed a new dose of momentum. The news was enough to send Nvidia to new highs and give hope to the bulls that this name is back in play.
Nvidia tends to be a great trading vehicle. It’s capable of big moves and tends to have great trending price action. It also has great liquidity.
If Nvidia is back in play, then day traders will automatically flock back to it as one of the preferred short-term stocks to trade.
Advanced Micro Devices (AMD)
While Nvidia can be a favorite among traders, its $500 to $600 price target can scare off some who prefer lower priced stocks. Think about it. Trading 100 shares of AMD around current prices is about $7,500. For 100 shares of Nvidia, it’s $64,000.
Accessibility plays a roll when traders are looking to get in and out of stocks. A lower-priced, high-volume stock like AMD also has a tight bid-ask spread. While that may not matter to the average investor, it certainly matters to day traders.
AMD can be a bit more finicky on the technical side, although it tends to be quite responsive to key levels, retracements measures and moving averages.
Obviously trading is a blend of art and science, and we’re working with a series of probabilities, not certainties. In other words, there are no slam-dunk holy grail setups. However, Advanced Micro Devices is a favorite among traders because it does tend to react more to key technical areas than many other stocks.
Another highly reactive stock is Tesla. This stock has been all over the map over years, and is perhaps the most hotly debated bull-bear argument of the decade. Shorts were convinced this name was heading for bankruptcy, while longs were convinced it was heading for the moon. Throw in the colorful Elon Musk and you can see why this name was so often in the news.
For a number of years it didn’t do much of anything, except bounce between a wide and rather tradable range.
Finally, the bulls won out, with Tesla climbing to new highs and eventually commanding a market cap of roughly $800 billion. Since then, Tesla stock has been highly reactive to its key trend points, moving averages and extension levels.
It’s a favorite among day traders, as Tesla stock has great liquidity and the potential to make massive moves. Even though 2021 has been a bit bumpier for EV stocks, Tesla won’t fall off the list of favorite short-term stocks to trade any time soon.
Tesla is the unquestioned 800 lb. gorilla, but Nio has turned out to be a fantastic performer as well. While Tesla commands a much larger market cap, Nio actually sports a better return off the 2019 lows.
While Nio is significantly smaller than Tesla, the two stocks are often considered great trading vehicles among traders — no pun intended.
While Tesla is mostly centered in the U.S. and is expanding to other markets, Nio remains a few years behind. The China-based EV producer still calls its home country its market. That’s just fine, with China sporting a population of 1.4 billion people.
Nio continues to gain momentum on production and deliveries, while revenue growth remains rampant. With that growth (and the stock’s explosive rally) has come an incredibly rich valuation.
However, when it comes to short-term stocks, the valuation doesn’t play a huge role. Instead, the technicals and momentum do as traders look for responsive price action and nice, wide moves. With Nio, we get plenty of that.
FuboTV is one of the newer names on this list. The stock wasn’t on traders’ radar until a few quarters ago. However, once the stock came to life in the fourth quarter of 2020, it has become one their favorites.
The stock’s dramatic rallies and subsequent plunges has made it an ideal candidate for swing traders. Even day traders have had success with this name due to the wide daily trading ranges.
Like Tesla to some degree, the streaming TV company has become a bit controversial in the sense that it has received a lot of debate among bulls and bears. However, those debates have led to big trading ranges. FuboTV sports robust growth estimates and if they come to fruition, it should act as fuel for momentum traders — and help further fuel some of those bull-bear debates.
Seeing as though FuboTV is such a newcomer to the list, it’s possible it fades from relevancy. However, it’s also possible that it remains a hot short-term stock to trade.
Last but certainly not least is Roku. The streaming giant has certainly seen its share of ups and downs. While far from being the largest name on this list, its recent rally has really landed Roku on the map.
For years, many doubters argued this company does nothing but “make a stick,” referencing its streaming hardware. However, the platform revenue and advertising dollars are what make this stock an attractive long position.
No matter how one slices it though, Roku still has its doubters. But one thing neither bull nor bear will argue is that streaming video only continues to gain momentum. As a result, that should keep Roku plenty relevant in the years to come.
So long as that remains the case, Roku should remain a very tradable name. Despite the favorable long-term case for the business, the stock has been prone to several large corrections. Although it can double or triple on the upside, pullbacks of 40% or more have not been uncommon.
On the date of publication, Bret Kenwell held a long position in ROKU.