More selling weighed on the indices on Tuesdsay. Remember, this week has the potential to be choppy, as we said the other day. The Fed is due up Wednesday afternoon and it’s a quadruple-witching expiration on Friday. Let’s look at a few top stock trades now.
Top Stock Trades for Tomorrow No. 1: Apple (AAPL)
That let us risk $2.50 (with a stop being at Monday’s high) for a reward of almost $10 per share at Tuesday’s low. It’s a bit cherry-picked, but it helps illustrate the trade. At the very least, rather than getting short Apple, traders who were long could have stopped out.
It would have saved them a lot of pain!
The tough part from here is determining what type of pullback we’re going to get. Is a 5% to 6% dip to the 8-day and 10-day moving averages all we’re going to get? We’re there now if that’s the case.
Or will it be a larger dip to the $165 area and 21-day moving average, good for a roughly 10% dip?
I don’t know — no one does. Anyone that says they do is lying because there’s no way to actually know. As traders, we determine how aggressive we want to be and how much risk to take on.
Aggressive bulls can buy on the dip to the 8-day and 10-day moving averages. Conservative bulls may wait for a larger dip and/or some type of rotation higher.
Top Stock Trades for Tomorrow No. 2: Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is getting interesting down here. Shares are currently about 15% off the highs and are now testing down into the 50-day moving average.
Like Apple, aggressive bulls can consider taking a shot down here. Nvidia is a great company with a ton of relative strength. A 20% dip to a key moving average is typically a buying opportunity in such cases.
If it fails to bounce, there’s a small gap to fill near $268 as the next level to watch.
On a bounce, I’m watching last week’s low near $280. Nvidia needs to reclaim this level to put the $287 level back in play. Above that, and the 10-day moving average and $300-plus are in play.
Nvidia is tough because it tripled from its March low to the November high. That said, it needs to rest and consolidate eventually — we just don’t know when.
Top Stock Trades for Tomorrow No. 3: Upstart Holdings (UPST)
Upstart Holdings (NASDAQ:UPST) is a great growth company, but like most growth stocks, it has been hammered as of late. Shares are now down 62% from the October high, after the company issued a beat-and-beat quarter, along with better-than-expected guidance.
Such is the market right now, though. Is there an opportunity brewing?
Traders have to be careful with this one and use proper position sizing. That’s as Upstart is filling the gap from August at $140.61. If it can bounce, we could be looking at a quick bounce back to the 200-day moving average. Above that, and $200-plus is possible.
If that’s the case, we can be long with a great cost basis. But we need a bounce. If UPST stock keeps melting lower, short-term bulls will have to move on.
Top Trades for Tomorrow No. 4: Cloudflare (NET)
Like most growth stocks, Cloudflare (NYSE:NET) has not fared too well. The stock is working on its fourth-straight weekly decline and has fallen more than 35% during that span.
NET stock is now near the 161.8% downside extension and the 10-month moving average.
There’s not much divergence on the chart, which would aid the bulls case. If Cloudflare can find its footing soon though, $140 to $144 could be in play soon. If it can clear the 10-day moving average, perhaps even $170 and/or the 21-day moving average could be next.
On the downside, though, a break of the 10-month moving average could put the 200-day in the mix.
On the date of publication, Bret Kenwell held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.