It was an interesting day on Tuesday, with tech stocks getting steamrolled, but the broader market — like the S&P 500 and Dow Jones Industrial Average — holding up relatively well. With that in mind, let’s look at a few top stock trades for Wednesday.
Top Stock Trades for Tomorrow No. 1: Broadcom (AVGO)
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Looking at a chart of Broadcom (NASDAQ:AVGO) is very calming at the moment. While the rest of the market is struggling, this stock gave us exactly what we were looking for: A retest back to the 10-day moving average.
Broadcom stock burst higher in December on better-than-expected earnings, then chugged its way up to new all-time highs. Finally we got a pullback and tag of the 10-day, which the stock energetically reacted to on Tuesday.
From here, I would love to see the stock push into the $675 to $677 area, putting new highs in play if it can clear this zone. Ultimately, $700 to $710 could be in play.
On the downside, however, a break of Tuesday’s low at $657.23 could put the $645 level in play, along with the 21-day moving average.
Top Stock Trades for Tomorrow No. 2: Advanced Micro Devices (AMD)
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After a great day on Monday, Advanced Micro Devices (NASDAQ:AMD) got slugged on Tuesday. Shares broke below $150 and is now cruising below the 10-day, 21-day and 50-day moving averages.
It’s also dipped down into uptrend support (blue line) on the day.
From here, I have my eye on the 10-week moving average, currently near $139.50. If the stock can’t hold this measure, the $130 to $135 area isn’t out of the realm of possibility.
On the upside, though, bulls need to see the stock reclaim the 21-day and 50-day moving averages and last week’s low at $143.55. If it can do that, perhaps it can work its way back up toward the $150 area.
Top Stock Trades for Tomorrow No. 3: Ark Innovation Fund (ARKK)
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I keep looking for a potential bottom in the Ark Innovation Fund (NYSEARCA:ARKK), but it just can’t seem to find any upside momentum.
While ARKK was putting in a few higher lows, it was also putting in a series of lower highs, while struggling with its short-term moving averages. Now it’s below both the 10-day and the 21-day moving averages and potentially gearing up for a test of the low near $89.
A break of this level — and preferably a gap below it — on bullish divergence (via the RSI reading at the bottom of the chart) would give bulls an opportunity for a reversal if ARKK can then reclaim $89.
Otherwise, there may be one last flush left in this one. If that’s the case, the $175 level could be in play, along with the 200-week moving average.
Top Trades for Tomorrow No. 4: Zoetis (ZTS)
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Zoetis (NYSE:ZTS) stock broke out over the $226 area in early December, held this level and the 10-day on a dip, then exploded higher. Shares nearly hit $250 amid the run, but suddenly, it’s under pressure.
Shares have shed more than 10% of their value in just four sessions on seemingly no meaningful news.
That sent ZTS right through the 10-day and 21-day moving averages. Now trying to firm up on the 50-day, I think there’s a bounce play at hand here.
On the downside, I want to see Zoetis hold last month’s low, near $219. On the upside, let’s see if it can reclaim $230 and test into the 21-day moving average. Above the 10-day and 21-day could put $240-plus on deck.
On the date of publication, Bret Kenwell held a long position in ZTS and AVGO. 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.
