It was another tough day on the tap, with stocks getting bullied lower. Downside breadth was intense and bulls are looking for some reprieve. Let’s look at some top stock trades going into the weekend.
Top Stock Trades for Monday No. 1: Amazon (AMZN)
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Amazon (NASDAQ:AMZN) stock has been getting hit, as it now sits near the $2,880 area. This level was key in the past, although the stock has simply thrashed around it in 2022.
If it can’t hold as support, bulls need to be open to the idea that this name will retest the lows, down around $2,700. To be honest, I’m surprised it’s not doing so already, given the action we’re seeing in other names.
On the upside, it’s a tough ride. Above $3,000 puts the 10-week moving average in play, then the 21-week. Lastly, that’s followed by $3,185.
On the downside, though, a break of $2,700 will have investors watching for a reversal trade (more on that with the stock below). Without a reversal and below $2,700, investors will start looking for a test of the 200-week moving average.
Top Stock Trades for Monday No. 2: Alphabet (GOOGL, GOOG)
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Speaking of reversals, bulls were hoping for one on Friday in Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG). That would have come on the break of $2,490 and then a bounce back up through this level. Thus, allowing bulls to be long at $2,490 with a stop-loss at the low of day.
Instead, Alphabet stock is simply cruising lower, despite its stellar fundamentals. On the downside, the $2,250 to $2,325 area should have investors’ attention. Near the former level, the stock would be down 25%.
However, it’s also where it finds the 38.2% retracement of the range (as measured from the 2020 low to the 2022 high), as well as the 21-month moving average.
On the upside, however, it’s pretty clear: GOOGL stock needs to reclaim the $2,500 level.
Top Stock Trades for Monday No. 3: S&P 500 ETF (SPY)
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The S&P 500 ETF (NYSEARCA:SPY) held this leg’s current 161.8% downside extension to the penny. Well, at least initially. If it continues lower without a meaningful bounce, keep your eye on the 2022 lows around $415.
Down in that area we find the 261.8% downside extension and the 21-month moving average. If those levels don’t hold, I do believe the unfilled gap at $400 could be in play.
On the upside, be cautious of a bounce back to the $435 to $438 area. That was support all this week and last week. A rally to this area could be the “D” leg in an ABCDE five-wave pattern.
I don’t want to make it too complicated. Simply put, a rally back to this area — as well as the 10-day and 50-day moving averages — could be a selling opportunity for one more flush lower.
Top Trades for Monday No. 4: Disney (DIS)
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Last but not least, Disney (NYSE:DIS) is on watch. Down more than 40% from the highs, and investors are surely finding some value.
Travel trends, streaming, Florida Governor Ron DeSantis — these have all been headlines and catalysts for the stock. Well, clear those from your head and just look at the chart.
Disney stock broke below the $125 to $128 area. That was support from earlier this year and the 61.8% retracement. With those out of the way, shares are breaking lower. Now we have to see where it finds its footing.
If it’s in the $100 to $106 area, buyers may have a knife-catching opportunity in this area. If Disney bounces before that, see how it handles a rebound to prior support ($125 to $128).
Should it get to $100 and support fails, $80-ish could eventually be in the cards.
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.
