After a powerful two-day rally, then a day of digesting the gains, the stock markets were choppy on Thursday. That’s as the index futures “roll” from the December expiration to March (although the December contracts will trade until next Friday). With all of that in mind, let’s look at a few top stock trades for Friday.
Top Stock Trades for Tomorrow No. 1: Bitcoin (BTC-USD)
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Bitcoin (CCC:BTC-USD) has been front and center lately, particularly with the spill it took late last week and over the weekend. While Bitcoin has stabilized, it hasn’t given us a significant rotation back to the upside.
The cryptocurrency was rejected by the 21-week and 10-day moving averages. Now moving lower again, Bitcoin is trading down into the 50-week moving average and holding just above the 200-day.
For now, it’s holding this week’s low, but barely.
Here’s the deal. A move below the 200-day that’s not quickly reclaimed could put the weekly VWAP measure in play near $43,750. Below that and the $41,000 level and last week’s low at $40,150 are vulnerable.
On the upside, though, we need to see Bitcoin clear this week’s high, currently near $52,000. That will also put it back above the 10-day and 21-week moving averages.
Top Stock Trades for Tomorrow No. 2: GameStop (GME)
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GameStop (NYSE:GME) is not giving investors the reaction they were hoping for, with shares down more than 10% after reporting earnings.
A dip on earnings wasn’t necessarily a bad thing. But a weekly-down rotation below $159 is not a positive development, especially as GameStop closes below this mark. If it ends the week below $159, that is an additional risk to take note of.
The stock lost the 50-week moving average, and now it’s going to struggle to regain it. If it can, a push up through its daily moving averages is virtually a must for the bulls. Over $200, and we can start looking at a potential squeeze up toward $250.
On the downside, however, we now have to wonder if the third-quarter low is in play, near $145. Below that, and GameStop is heading even further into no man’s land.
Top Stock Trades for Tomorrow No. 3: Lululemon Athletica (LULU)
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Let’s look at a couple of companies reporting earnings, starting with Lululemon Athletica (NASDAQ:LULU).
Pulling back hard over the last few weeks, Lululemon stock is finding its footing around the 21-week moving average. I would love to see a post-earnings move that sends the stock back over $435.
Above that level, LULU stock has a chance to reclaim the 10-day and 50-day moving averages. If it can do that, then the $450 level is in sight.
On the downside, though, a break of this week’s low puts $400 in play. Below $400 could give investors a test of the $385 support zone and the 200-day moving average.
Top Trades for Tomorrow No. 4: Chewy (CHWY)
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Chewy (NYSE:CHWY) also reports earnings after the close, and like Lululemon, the stock has not been doing well lately. Unlike Lululemon, though, it’s been doing much worse.
Ever since surging to a high in February, Chewy has found itself chopping around in a wide-ranged falling wedge. It’s near the 61.8% retracement of its entire trading range, and just recently broke below the November low and wedge support.
However, it’s doing so on bullish divergence.
Nonetheless, let’s see how this one reacts to earnings. Obviously, lower is bad and puts $50 in play. But on the upside, a move back over $60 could really get the party started.
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.
