Breadth wasn’t very good on the first trading day of the holiday-shortened week. That said, bulls bid stocks higher after an early morning selloff. That said, let’s look at a few top stock trades for Wednesday.
Top Stock Trades for Tomorrow No. 1: Snap (SNAP)
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Snap (NYSE:SNAP) has been struggling with the $65 level on the upside, even as the $48 level on the downside was acting as support. Shares were mostly range-bound between these two levels, with the rally above $65 in February only lasting a few weeks.
Now clearly over $65, bulls are looking for some guidance. Earlier in the session, shares went daily-up over $69.04, weekly-up over $69.29 and monthly-up over $69.35.
If the stock can hold up over those rotation points, $70-plus is on the table and could come in a hurry. More specifically though, that type of multi-timeframe rotation opens up notable potential. In this case, I would have my eye on the 2021 high near $73.60.
Above that, and the low-$80s seems possible.
On the downside, though, keep an eye on the 10-day moving average. Below puts the 10-week and 21-week moving averages in play, as well as $65.
Top Stock Trades for Tomorrow No. 2: International Business Machines (IBM)
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International Business Machines (NYSE:IBM) is a name I had my eye on last week. The late-week dip seemed aggressive but I wanted a better risk/reward via a larger decline. We got that pullback on Tuesday, and we were ready.
On Tuesday, IBM dipped to the $137 breakout level and the 200-unit moving average on the four-hour chart. This was a better setup than getting long on Friday near $140.
Now, I’m looking for a bounce up to the $139.50 to $140 area first. Above that could open the door to the $143 area and the 10-day moving average. Above that puts $145-plus in play.
On the downside, however, I don’t want to see a four-hour close below $137.
Top Stock Trades for Tomorrow No. 3: Starbucks (SBUX)
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Starbucks (NASDAQ:SBUX) is another name we have been watching. After flagging this one last week, we’re finally getting the rotation that the bulls wanted.
Shares are pushing weekly-up and monthly-up and making a strong move to the upside. From here, the prior highs near $119 seem like a possibility, as does the 161.8% extension up near $121.
On the downside, it’s possible that we see some “back-and-fill” price action, but as long as SBUX stock holds the $113.22 level and the 10-day moving average, those dips seem like buying opportunities.
Starbucks is a great example of proper preparation, and being ready to strike when favorable odds are presented.
Top Trades for Tomorrow No. 4: Alibaba (BABA)
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Alibaba (NYSE:BABA) is under pressure with other Chinese equities on Tuesday. Yet, it’s not breaking down below key support. The $230 level rejected Alibaba, with some harsh selling coming into the end of last week.
The selling continued on Tuesday, with shares clearly breaking below all of its major daily moving averages. However, the $211 area continues to buoy the stock, as Alibaba also found some footing on the backside of its prior downtrend measure (blue line).
I wouldn’t hang my hat on that necessarily, but it’s good to see that it’s got some support nearby.
Let’s keep an eye on that $204.39 level. A break of that mark likely puts the 200-week moving average in play. Below that and BABA will officially be in no man’s land.
On the upside, we need to see it clear its daily moving averages, like the 10-day and 50-day. Above the gap near $221.50, and $230 resistance is on the table.
On the date of publication, Bret Kenwell held a long position in IBM and SNAP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. 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.
