Two weeks ago, the bears were raving about how the equity market “bubble” was about to burst. Well that argument has gotten suddenly quiet as the S&P 500 works on its seventh straight daily gain and approaches new highs. Let’s look at some top stock trades, starting with a few big ones.
Top Stock Trades for Tomorrow No. 1: Tesla
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Man, how rewarding has this stock been? Tesla (NASDAQ:TSLA) has been an absolute beast, now up in nine straight weeks. The stock topped out at $900 on Thursday, 40 cents short of the all-time high.
We have been bullish on this name for a while now, but recently called for the stock to hit $1,000 a share and a market capitalization of $1 trillion.
The first step in that process will be making new all-time highs. On the downside, I want to see the stock’s short-term moving averages like the 10-day and 21-day continue to hold as support.
The more time Tesla can spend over the $880 to $900 area, the better the odds become that the stock will be able to climb to $1,000.
Should a larger dip come along, let’s see how the $780 to $800 area holds as support.
Top Stock Trades for Tomorrow No. 2: Nvidia
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Nvidia (NASDAQ:NVDA) has paid off incredibly well lately too. The stock gave us a powerful weekly-up rotation and we were fortunate enough to be all over it.
Now sustaining over $220, Nvidia bulls are looking for a push over resistance and the all-time high near $230. If it can break out over this level, it could set the stage for a run up toward $250 and the 161.8% extension near $252.
On the downside, watch for a break below $220. That could open the door to the 50-day moving average.
Top Stock Trades for Tomorrow No. 3: PayPal
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Investors really are not liking the news about PayPal (NASDAQ:PYPL) exploring a purchase of Pinterest (NYSE:PINS). The reports must be legitimate — PayPal wouldn’t allow its stock to fall more than 10% in two days on a rumor if it had no merit. Management would simply say it’s untrue.
That doesn’t mean the deal will happen, but it must be a real discussion that’s taking place.
Originally we had an “ABC” correction down to the 10-month moving average and a nice rotation higher. However, that turned into a five-wave “ABCDE” correction when the stock broke down from the 50-day moving average on Wednesday on the Pinterest news.
Now bulls are trying to figure out where support will come into play. I am looking for some type of reversal in the stock, like a gap-down open and a reclaim of the prior day’s low.
In this case, let’s see if the $240 to $241 area acts as support. That’s the 161.8% downside extension of the current “C-D” leg. On the upside, PYPL stock needs to reclaim the 10-month moving average. If it’s resistance, bulls could struggle in the intermediate term.
Top Trades for Tomorrow No. 4: Square
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While PayPal struggles, Square (NYSE:SQ) seems to be doing just fine. The stock is working on its eighth straight daily gain and is making multi-week highs.
The stock is also clearing the 50-day moving average and downtrend resistance (represented by the diagonal blue line).
From here, let’s see if Square stock can climb to the $275 resistance area. A push through this zone opens the door to the $283 to $285 resistance level. Above that and we can turn our focus to $300-plus.
On the downside, I’d love to see the 10-day and 50-day moving averages act as support, but I mostly want to see Square hold up above prior downtrend resistance. That will keep buyers in control in the short term.
On the date of publication, Bret Kenwell held a long position in NVDA and PINS. 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.
