With the Federal Reserve beginning its two-day meeting today, stocks were able to put together a surprising rally. With that in mind, let’s look at how some of our top stock trades are setting up now.
Top Stock Trades for Tomorrow No. 1: Oil
The oil market has been incredibly volatile — adding to the market-wide volatility we’ve seen elsewhere. Some may prefer to trade oil via the United States Oil Fund (NYSEARCA:USO), while others may prefer to trade the stock side of it via the Energy Select Sector SPDR ETF (NYSEARCA:XLE).
Of course, some may just stick to the futures contracts too (either via CL or QM).
Initially, the $103 area held as support after crude oil topped out near $130 and violently pulled back. Now that $100 and the 21-day moving average have failed as support, crude is continuing its descent.
Now trading with a $94 handle, crude is down into the 10-week moving average and a prior support area. The chart here does a good job illustrating these areas, with the daily chart on the left and the weekly on the right.
A little more downside could put the 50-day in play just under $92. If the selling keeps up, $85 to $87 could be on the table. On the upside, though, see if crude can reclaim $100 and the 21-day. If these levels are resistance, volatility may persist.
Top Stock Trades for Tomorrow No. 2: Tesla (TSLA)
However, shares are pushing back to the upside as the overall market rallied on the day. It’s enough of a boost to reclaim last week’s low and the key $792 area.
While the declining 10-day moving average is technically the next level to watch, the 21-day has been active resistance for more than a month now. That is the key measure to watch for now.
If Tesla fails to reclaim it, this week’s low near $756 remains vulnerable. Below that is the 21-month moving average.
However, if the stock can clear the 21-day, it puts the 200-day in play, followed by the daily VWAP measure and the 10-week moving average. If it can clear all of these measures, $885 could be in play next.
Top Stock Trades for Tomorrow No. 3: Coupa Software (COUP)
It’s been a tough run for Coupa Software (NASDAQ:COUP). While shares were off the lows the day, the stock was still down nearly 20% on Tuesday. Unfortunately, it comes after earnings and despite a solid bounce in the overall market.
With the move, shares are plunging below $100 a share and the 2020 Covid lows. Shares are also breaking below that key $82 area.
On the downside, I can’t help but peek at the $52 zone, which was solid support in 2019. If we get that far, I would start looking for a buying opportunity in Coupa stock.
Shares are already down more than 80% from the high, but that doesn’t mean the stock can’t fall further. Back over $82, though, and perhaps it can gain enough momentum to return to $100 and the declining 10-day.
Top Trades for Tomorrow No. 4: Alibaba (BABA)
Like Coupa, I have my eye on a certain area for Alibaba (NYSE:BABA) stock. While this level once seemed impossible because it was so far away, the $60 area is now within a stone’s throw from current levels.
Chinese equities have been demolished and admittedly, there are risks with the group. However, Alibaba is a high-quality company that’s now down more than 75% from the all-time high.
The stock is oversold, but that doesn’t mean it can’t continue lower. If we snap higher before testing this area, watch $100 and the declining 10-day and 10-week moving averages. These would be potential selling opportunities.
For those that say $60 can’t happen, just look at the decline to $75 — which was likely off the table to bulls not that long ago. If it gets there, I’ll start looking for opportunities.
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.