The markets opened higher on Tuesday led by tech, but couldn’t hold the bulk of those gains after the first few minutes. That said, let’s look at a few top stock trades for Wednesday.
Top Stock Trades for Tomorrow No. 1: Wendy’s (WEN)
Wendy’s (NASDAQ:WEN) is the latest stock to get the “meme treatment,” with shares exploding to new highs.
Wendy’s blew through its prior high near $25 and almost tagged $30 on the day. In fact, shares briefly rallied through the 161.8% extension of the current range. From here, this extension may play a key role.
Above the 161.8% extension keeps Tuesday’s high in play at $29.46. Above that, and the two-times range extension is on the table at $30.75.
Below the 161.8% extension and Tuesday’s low remains vulnerable. Below that mark could put a retest of the prior high in play near $25, along with a test of the 10-day moving average.
Top Stock Trades for Tomorrow No. 2: Fastly (FSLY)
Fastly (NYSE:FSLY) reported an outage overnight, taking a number of prominent websites down. The result? A share price that’s ripping higher.
Perhaps it’s because people are finally learning what Fastly does…but who really knows. The important thing isn’t the news, but the reaction to the news.
From here, let’s see if we can get a gap-fill up at $58 and a tag of the 200-day moving average. If we do and Fastly is rejected, I want to see the 10-day moving average act as support, along with $50.
On a move above $58, perhaps we can get a push up toward the 21-week moving average.
Top Stock Trades for Tomorrow No. 3: The IWM ETF (IWM)
The iShares Russell 2000 ETF (NYSEARCA:IWM) is back in a leadership role, with the index near its highs.
The exchange-traded fund (ETF) is running right into resistance in the low $230s, an area that’s been a headwind since February. While investors continue to clamor for a larger correction, keep in mind, indices like the Russell 2000 have been consolidating for months now, while many sectors have undergone heavy rotations.
If we get a breakout over $235, perhaps investors can use a intermediate-term price target of $250. Not only is it a nice round-number target, but it’s also where the 161.8% extension comes into play.
On the downside, keep an eye on the $222 to $224 area. In that zone, the IWM finds its 10-day and 21-day moving averages, along with the 61.8% retracement.
Top Trades for Tomorrow No. 4: Clover Health (CLOV)
Like Wendy’s, Clover Health (NASDAQ:CLOV) is exploding higher on the day.
Like the move in Biogen (NASDAQ:BIIB) the other day, the stock rallied to the 161.8% extension before backing off.
On the upside, the 161.8% extension and Tuesday’s high are the first target. Above those levels opens up other key extensions, like the two-times range and 261.8% extensions, respectively.
On the downside, look for a retest of the prior high near $17.50. If it holds, it could be an opportunity for bulls. If not, look for a test of the 10-day moving average.
Top Trades for Tomorrow No. 5: Workhorse (WKHS)
Workhorse (NASDAQ:WKHS) is trying to gain more upside momentum, but it still faces stiff resistance from the 21-week moving average. Just like last week, it’s having trouble clearing this level.
However, if it can do so and go weekly up, we could see a quick move to $20 and the 200-day moving average. That could put $28.50 in play — the 61.8% retracement — followed by the gap-fill at $31.
Below $15, and we may get a test of the 10-day moving average. Below that puts the 50-day in play.
On the date of publication, Bret Kenwell held a long position in FSLY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.