The overnight futures weren’t flashing any major warning signs, but it would have been nice if they did, as stocks were hit hard on Monday, especially tech. With that in mind, let’s look at a few top stock trades for Tuesday.
Top Stock Trades for Tomorrow No. 1: Nio (NIO)
With Nio’s (NYSE:NIO) rally in early September, it wasn’t clear if the stock was simply going for a three-wave correction or if it was setting up for a larger five-wave “ABCDE” correction.
So far, though, the latter is playing out.
On a day where Tesla (NASDAQ:TSLA) and other peers were rallying nicely amid an onslaught of selling, Nio broke to new multi-month lows. Specifically, the stock gave us a monthly-down rotation at $34.43.
Keep the $34.43 level in mind. Back above that mark, and the 10-day moving average could lead to a larger bounce. On the downside, however, keep the $30.50 to $32 area in mind. This should be a bounce zone for Nio.
Top Stock Trades for Tomorrow No. 2: Facebook (FB)
Monday was not a great day for Facebook (NASDAQ:FB). Not only did all of its platforms go down (Facebook, Instagram and WhatsApp), but a whistleblower really caused some early selling pressure.
The chart is interesting. On the one hand, the widely-followed 200-day moving average is still down near $315. On the other hand, the lesser-followed 10-month moving average is coming into play now.
Aggressive bulls are likely getting long against the latter now, using Monday’s low as their stop-loss or at the very least, as their point of reference. A break below the 10-month will likely put the 200-day moving average on tap.
Like Nio, Facebook stock needs to reclaim the 10-day moving average and the September low to see a more sustainable bounce play out.
Top Stock Trades for Tomorrow No. 3: Nike (NKE)
Nike (NYSE:NKE) reported earnings a few weeks ago, and it hasn’t been a pretty ride since. However, there’s a pretty clear line in the sand.
So far, the $145 to $147 area is holding as support, along with the 200-day moving average. Nike stock also has the 10-week moving average nearby. The $145 to $147 zone was a major breakout area. To me, it’s no surprise that it’s holding as support.
However, we now have our line in the sand. If Nike breaks below $144 and can’t reclaim this level, traders can bail on their long position.
On the upside, though, the stock needs to reclaim the 10-day moving average, along with the $150.50 level. That puts the 21-day moving average in play, along with the gap. Despite the recent weakness, I’m impressed that Nike is further breaking down while the market remains under pressure.
Top Trades for Tomorrow No. 4: Penn National Gaming (PENN)
Penn National Gaming (NASDAQ:PENN) was looking pretty good last week, giving us a weekly-up rotation. However, I wanted to hold off on this one until after the weekend.
I’m glad we did. After a strong finish to last week and closing above all of its major daily moving averages with the exception of the 200-day, Penn is pulling back, now below its 10-day and 21-day moving averages.
Let’s see if the stock can hold the 50-day moving average and uptrend support (blue line). If it can, we’ll need to see it reclaim its moving averages, followed by a push over $79.
However, below uptrend support could put $70 in play, followed by the 21-month moving average.
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.