After the markets gapped higher and pushed into resistance, stocks faded hard on very bearish downside breadth. With that in mind, let’s look at a few top stock trades ahead of Friday.
Top Stock Trades for Tomorrow No. 1: Apple (AAPL)
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When the markets were rallying, Apple (NASDAQ:AAPL) was showing some nice relative strength. However, it also showed vulnerability.
The stock was rallying right into the underside of the 21-day moving average and the 50% retracement of the current range. If it continued higher, the 61.8% retracement would have been in play.
Instead, it recoiled and then traded below the 10-day and 50-day moving averages. Now all of a sudden, the $163.50 area is on watch.
If that level breaks, the 200-day moving average will be in play. If the stock really breaks down, the low-$150s could be in play.
Top Stock Trades for Tomorrow No. 2: United Airlines (UAL)
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United Airlines (NASDAQ:UAL) is reacting nicely to earnings, but the market-wide selling is weighing it down.
It momentarily cleared the first-quarter high up near $51. The move came after a solid report that seemed to indicate that travelers are back. American Airlines’ (NASDAQ:AAL) earnings report also seemed to back that up.
Fading now, watch the post-earnings low at $50.23. Below $50 and it could open the door back to the $47 area and fill the gap.
On the upside, a move over $51 puts the post-earnings high in play. That’s followed by a potential move toward $54.50.
Top Stock Trades for Tomorrow No. 3: Ark Innovation Fund (ARKK)
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The Ark Innovation Fund (NYSEARCA:ARKK) has been on watch as high-growth names are back under pressure. Tesla’s (NASDAQ:TSLA) earnings pop and subsequent fade took many investors off-guard (but shouldn’t have) and with Tesla being ARKK’s top holding, the latter is taking a hit too.
With Thursday’s decline, ARKK is now trading back toward this year’s low. I would love to see a washout on high volume below this mark and an eventual recovery back above $52.
As much as growth stocks remain vulnerable while the overall market has held up relatively well, we have to realize there are many high-quality names in this bunch that have been battered.
For now, I am waiting to see how it handles the $51.85 low and go from there. A break below it and reversal back above $52 could get investors long for a potential trade, with a stop-loss just below whatever the low ends up being (assuming it’s reasonable).
Top Trades for Tomorrow No. 4: Snap (SNAP)
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The action in Snap (NYSE:SNAP) has been really unfortunate. The stock has been trading poorly since it last reported earnings, even though the results were much better than expected and sent the stock soaring.
If it can do it again, I wouldn’t rule out a return to the $40s. If it disappoints, the gap-fill at $26.50 could be in play. Below that and the 2022 lows may be on tap at $24.32.
If we get a gap-up into the 50-day and 21-day moving averages, investors have to use caution in case it fades from those measures.
Proceed carefully as a trader in growth stocks, even though there are opportunities for investors.
On the date of publication, Bret Kenwell held a long position in SNAP. 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.
