Stocks gapped down on Friday and while they enjoyed a small bounce, it was meager and short-lived compared to the losses we’ve seen lately. With that in mind, let’s look at a few top stock trades for next week, starting with the S&P 500.
Top Stock Trades for Monday No. 1: S&P 500 (SPY)
Using the SPDR S&P 500 Trust ETF (NYSEARCA:SPY), look at the cascading selling pressure we’ve seen since the SPY failed to hold the 21-week moving average.
While this was a dependable moving average, the number of times it has been tested lately definitely raised a few eyebrows.
Now that it’s clearly failed as support, we have to see how the 200-day moving average holds up. It’s promising to see a mild bounce on Friday, but the bulls are struggling to hold those gains.
Maybe we undercut Friday’s low early next week, reclaim it and the 200-day moving average, and see a real snap-back rally. However, it’s also possible that the 200-day also fails.
If that’s the case, let’s see if we fill the gap down near $436 and whether we tag the 50-week moving average and the weekly VWAP measure.
On the upside, however, I expect the declining 10-day moving average to be resistance, along with the 21-week moving average — if we get there.
Top Stock Trades for Monday No. 2: Ethereum (ETH-USD)
Markets are in a “risk-off” state, and that includes Ethereum (CCC:ETH-USD) as well.
Ethereum hit its fifth straight daily decline, and is breaking below the key $3,000 level. Not only was this support earlier this month, but it’s where it finds the 50-week moving average and the weekly VWAP measure.
Breaking below it now and Ethereum is running into the $2,600 to $2,700 area, which was support in late September before it ran to new all-time highs.
Should Ethereum lose $2,500, it could put the triple-bottom low in play near $1,750. For Bitcoin (CCC:BTC-USD), that’s roughly the $30,000 area — assuming they trade in sync.
Top Stock Trades for Monday No. 3: Starbucks (SBUX)
Starbucks (NASDAQ:SBUX) is looking a bit interesting for longer-term bulls who are looking to nibble vs. go all-in.
Shares are trading down into the $96 to $100 zone, which was a big breakout level in late 2020. The stock is also down about 25% from the highs.
If this area acts as a bounce zone, keep an eye on the $100 level and the 21-month moving average. Back above both marks, and we could see a further rally in Starbucks. More conservative investors could wait for the stock to reclaim these levels before getting long.
On the downside, however, a break of this week’s low could put the $91.28 gap fill in play. In the same area is a monthly VWAP measure and a weekly VWAP measure. Between the three levels, I would hope the stock can find its footing.
Top Trades for Monday No. 4: Amazon (AMZN)
Last week, the stock found support at the 21-month moving average, but that clearly isn’t the case anymore.
I looked at Amazon on Thursday and put an alert in at $2,880 — not thinking it would be hit this week.
Well, here we are with the stock trading right down to this prior range support level. If it fails and isn’t reclaimed, I don’t really know what level stands out next. Could it put $2,500 in play?
It certainly could.
If we get there, that’s a prior breakout level, as well as the 200-week moving average and the monthly VWAP measure. Back over $2,900 and we could see a bounce, hopefully beyond $3,000, but that’s a decent bounce otherwise even if that can’t further.
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.