After back-to-back big up days, the stock market did a pretty good job containing its gains and chopping sideways on Wednesday. With that in mind, let’s look at a few top stock trades for Thursday — the “roll day” for the index futures.
Top Stock Trades for Tomorrow No. 1: Digital World Acquisition Corp. (DWAC)
Digital World Acquisition Corp (NASDAQ:DWAC) is a stock that has garnered some attention on Wall Street. Under significant pressure since ripping higher in late October, shares have been finding some upside traction lately.
However, the stock is running into some resistance on Wednesday, near $63 to $65.
If there is further acceleration, the key level to watch will be the November high near $70. Over $70 and who knows, perhaps $100 could be back on the table in this wild mover.
On the downside, however, keep a close eye on Wednesday’s low at $48.50. A break of this level not only sends the stock back below $50 but also puts it back below the 10-day and 21-day moving averages.
That’s not a position that bulls want to find themselves in.
Top Stock Trades for Tomorrow No. 2: Bakkt Holdings (BKKT)
Another wild mover? Bakkt Holdings (NYSE:BKKT), which jumped nearly 30% on the day and built on Tuesday’s 5% rally.
While not many people are anxious to be buying a 35% two-day rally, an important area looms just ahead.
That’s the $17.50-ish zone, where we find last week’s high and the 10-week moving average. If the stock can clear this level, then $20 is possible, followed by $25 to $27. Above that, and the 50% retracement is possible.
If this area holds as resistance, though, we may see $15 or lower again, followed by the 21-week and 50-week moving averages.
Top Stock Trades for Tomorrow No. 3: Costco Wholesale (COST)
Excluding Wednesday, Costco Wholesale (NASDAQ:COST) has been a relative strength monster. Even as the market was wobbling, Costco continued to hold up.
Amid its monstrous rally, Costco stock ripped off a stretch where it rallied in 15 out of 16 sessions, consolidated, then climbed in nine out of the next 10 days. In all, it rallied in 25 out of 30 trading sessions in that run.
After some volatility last week, Costco snapped back, but today’s gap-up open was sold into — aggressively. So aggressively in fact that we have a bearish reversal candle as the stock struggles to hold the 21-day moving average.
A break of $525 opens the door to last week’s low near $514. If we get a weekly-down rotation, it will likely be healthiest to give bulls a nice flush down to the $500 area.
Not only is that a key psychological level, but it was also a big breakout mark in early November. It’s also near where the 50-day moving average and daily VWAP measure are.
Keep in mind, Costco reports earnings after the close on Thursday.
Top Trades for Tomorrow No. 4: DocuSign (DOCU)
DocuSign (NASDAQ:DOCU) has been hit so hard, that Wednesday’s 11% rally looks minuscule on the chart.
That’s following the one-day 42.2% decline it suffered last week on earnings. That came on volume that was 140% larger than the previous record volume day and was almost 50 times the regular average volume on a given trading day for DocuSign.
As it nears $155.40 though, this one is worth watching.
That’s the post-earnings high and if we can get a push over that mark, it puts a “gap attack” in play — essentially some sort of attempt to fill this massive gap.
The gap runs all the way up to $227.47. If the stock starts to squeeze higher, I’m not sure how far it will go. Perhaps only to the 8-day or 10-day moving averages, if bulls are lucky. If it clears these measures, see how it handles $185.
On the downside, however, a break of this month’s low near $131.50 is a bad sign for bulls.
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.