Does the stock market correction have merit yet? The S&P 500 was trading terribly, down in eight of 10 sessions, but logged a peak-to-trough decline of just 2.3%. With Monday’s 1.7% decline, we’ve finally seen the index drop 4%. That said, let’s look at a few top stock trades.
Top Stock Trades for Tomorrow No. 1: Invesco QQQ ETF (QQQ)
Everyone likes to focus on tech, so let’s look at one of the most popular ways of gaining exposure to the group, via the Invesco QQQ ETF (NASDAQ:QQQ).
The S&P 500 has steadily found support at the 50-day moving average, although that measure faltered on Monday. For the QQQ, it has been far less reliant on the 50-day, if only because it hasn’t take the time to test it very often over the last few months.
The exchange-traded fund (ETF) has been on fire since late-May and early June. On the downside, let’s see how it handles the $360 level. Breadth was horrendous on Monday, so it may have investors looking around for a short-term bottom.
That said, if we don’t see things turn around soon, the 21-week moving average may be in play. Below that could eventually put the $340 to $345 area in play, along with the weekly VWAP measure and the 200-day moving average.
On the upside, though, let’s see if the QQQ can reclaim $370 and the 50-day moving average.
Top Stock Trades for Tomorrow No. 2: Ethereum (ETH-USD)
Stocks were hit and cryptocurrencies were hammered. Ethereum (CCC:ETH-USD) didn’t sidestep the pain, falling more than 7% on the day and hitting a one-month low.
With Monday’s dip, Ethereum is finding some support near the $2,950 to $3,000 area, which has been support for the last two months.
If it breaks, look for a dip down the 21-week moving average, then the 200-day. Bulls don’t want to see a move below $2,500, which could usher in more selling pressure.
If $3,000 ends up holding as support, let’s see if Ethereum can push back up to the 50-day moving average, then the 21-day. In a lot of ways, Ethereum looks similar to (although is far more volatile) than the QQQ.
Top Stock Trades for Tomorrow No. 3: Nio (NIO)
Nio’s (NYSE:NIO) charts weren’t doing it any favors before Monday’s session, then the stock was buried lower in the session.
The weekly VWAP measure is failing as support, as is the August low. That’s giving the stock a weekly-down rotation, as an “ABCDE” correction takes hold.
From here, we have to see where support comes into play. Will Nio find its footing around $35 and reclaim $36.24? Or will we see more selling pressure down toward $32?
In either scenario, those are the areas to watch for now.
Top Trades for Tomorrow No. 4: Lennar (LEN)
Lennar (NYSE:LEN) reported earnings after the close, but the stock has already been correcting for a few weeks. Shares have fallen in 10 of the past 12 sessions.
The $110 level has proven to be significant resistance lately. If the stock can reclaim uptrend support (purple line) and some of its key moving averages, bulls will inevitably shift their focus to this area.
On the downside, Lennar stock continues to find support near $97. However, if the stock suffers from a bearish post-earnings reaction, let’s see if the 50-week and 200-day moving averages can act as support.
Below those marks could put the $85 to $87 area in play.
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.