After a quiet post-Fed session on Wednesday, we got a burst of volatility on Thursday. U.S. stock futures began selling off overnight, creating a tricky open for those that were overly long coming into the day. That said, bulls rose up to the challenge. Let’s look at a few top stock trades for Friday.
Top Stock Trades for Tomorrow No. 1: Alibaba (BABA)
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Alibaba (NYSE:BABA) was a fun setup from the day. It’s no secret that this stock has been struggling quite a bit since its Q4 highs. After four straight declines, Alibaba gapped lower on Thursday.
It’s not a great look. However, shares are finding a bid near $200 and at the 200-week moving average. There’s a bit of divergence in the Williams %R measure as well (circled at the bottom of the chart).
From here, I’d like to see Alibaba fill the gap from Thursday up near $208. Back above $212, and the 50-day moving average may be in play. A slight bounce then a rollover would not be a good look and could leave Alibaba stock vulnerable to more downside.
From here, let’s see what kind of bounce materializes, assuming one comes at all. The 200-week moving average should help out a bit.
Top Stock Trades for Tomorrow No. 2: Nio (NIO)
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Nio (NYSE:NIO) was most definitely a dip-buying opportunity this morning. This one has had a lot of momentum since bottoming in May. However, it’s been under pressure over the past few sessions.
Thursday’s gap-down open sent Nio down right into a cluster of moving averages, including the 200-day, 50-day and 21-week moving averages. This is a buying opportunity.
The stock essentially filled the gap, but let’s see if shares can test up into the 10-day and 21-day moving averages. Above that could put $50 in play, then the 61.8% retracement, which was resistance last week. Remember, this level was flagged.
On the downside, a break of the 50-day moving average puts the 50-week moving average in play, along with the $40 mark.
Top Stock Trades for Tomorrow No. 3: Wynn Resorts (WYNN)
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Wynn Resorts (NASDAQ:WYNN) has a pretty attractive setup as far as dip-buying goes. There are three main reasons for this.
First, shares are testing the 200-day moving average for the first time all year. Second, Wynn finally filled the gap at $110.19. Lastly, the Williams %R reading isn’t making a new low while the stock is (which is divergence).
Support, plus a gap-fill, plus some divergence will certainly get bulls interested.
Now remember, in trading we’re working with probabilities — not certainties. The fact that there are several catalysts lined up doesn’t mean Wynn will bounce. It just means that the odds are better than if any one of these catalysts were working alone.
I’d love a bounce up toward the $117 to $120 area and then reassess the stock from there. On a further flush, the gap-fill near $102.60 could be in play.
Top Trades for Tomorrow No. 4: Invesco QQQ ETF (QQQ)
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Speaking of a gap-fill, check out the nice action in the Invesco QQQ ETF (NASDAQ:QQQ). This one ended up being an excellent bounce play that I flagged this morning.
It gave us a nice reset to the 10-day moving average, it’s first test of this measure in more than 10 trading sessions.
With the bounce already underway, let’s see if shares can push up through the $360 mark. If so, new highs may be on tap.
On the downside, a break of Thursday low could put the 21-day moving average in play. Below that and the $343 area should draw some interest among the bulls.
On the date of publication, Bret Kenwell held a long position in BABA. 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.
