After a big multi-day rebound, stocks looked tired on Thursday and rolled over after the open. While the Dow stood tall for a while, the Nasdaq really took a hit. Let’s look at some top stock trades for Friday.
Top Stock Trades for Tomorrow No. 1: Ford
Ford (NYSE:F) has been a total beast for us lately and today it roared to new highs. The stock delivered by hitting our 261.8% extension target near $25.50.
However, the afternoon pullback in the overall market is dragging Ford stock down too.
From here, let’s give Ford stock some time to rest. If it can hold $25, then the $25.50 level and this week’s high are in play. Otherwise, let’s see how it handles a test of the 10-day moving average.
For now, this stock has some of the strongest relative strength in the market and we don’t want to ignore that. Instead, we want to be buyers of the dip.
Top Stock Trades for Tomorrow No. 2: Broadcom
Broadcom (NASDAQ:AVGO) isn’t giving me quite the action I was hoping for today.
On today’s pullback, I wanted to see the stock find its footing at the 50-day moving average and rotate back up through Monday’s low near $603.50. Of course, it could still do that, in which case it would put the $625 area and the 10-day moving average in play.
Until recently, this was one of the top-performing stocks. So like Ford, we want to buy the dip but only when the risk/reward is in our favor.
If the 50-day isn’t support, look for a potential gap-fill near $590, and don’t be in a hurry — let the setups prove themselves first.
Top Stock Trades for Tomorrow No. 3: Netflix
Those who have read this column for a while know that I rarely discuss head-and-shoulder (H&S) setups. They just aren’t my bread and butter. However, we have a sort of H&S breakdown here, alongside a potential ABC correction.
The 261.8% downside extension of that ABC correction comes into play near $520.
Does that mean NFLX could find its footing soon? That’s what we’re waiting to see. Unfortunately, it can take place in many forms.
I hate to make it sound complicated, because I pride myself on simple setups. So look at it like this:
- If Netflix rotates higher tomorrow, it needs to reclaim $538.22 — last week’s low.
- If it gives us a bullish reversal next week, it will need to break or open below this week’s low and reclaim it.
- However, if it rotates higher next week (instead of breaking the low), it needs to reclaim the 21-week moving average and preferably go weekly-up over this week’s high currently near $544.
Top Trades for Tomorrow No. 4: Virgin Galactic
I liked Virgin Galactic (NYSE:SPCE) for a long time as a speculative holding. While it enjoyed plenty of upside over the last two years, it’s not the type of stock you want to hold when there’s a bear market in growth stocks.
If the stock can’t hold $9, we may very well see the Covid-19 low at $9.06. If that mark doesn’t hold — and I’m surprised it’s not lower — then the all-time low could be in play near $7.
On the upside, let’s see how SPCE handles the declining 10-day moving average. If it gets to the $14 to $14.25 area, let’s see if this area is resistance (we’ll assume it is, for now).
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.