The markets put together a nice rally on Tuesday, following Monday’s disappointing attempt. With that in mind, let’s look at a few top stock trades for Wednesday as earnings season really gets underway.
Top Stock Trades for Tomorrow No. 1: Netflix (NFLX)
Speaking from the stock’s perspective, it’s hard to imagine sentiment being worse in Netflix (NASDAQ:NFLX) ahead of earnings. The stock is dragging along one-year lows, down about 50% from the highs.
Seriously, sentiment is horrible here. On a pop, bulls need to see if Netflix can reclaim the 10-week moving average, which was resistance last month. Above that could open the door to the $385 to $400 range.
If shares clear that, the 200-week moving average is in play.
On the downside, though, keep a close eye on the $330 area. A break and close of this mark could put the Covid-19 lows back in play at $290.
Top Stock Trades for Tomorrow No. 2: Roku (ROKU)
As an investor in growth stocks, I do believe there is long-term value in Roku (NASDAQ:ROKU) after the haircut it has taken. That doesn’t mean the low is in and it does not mean the charts look good. In fact, as a trader, this chart looks downright horrible.
Based on Netflix’s reaction to earnings, Roku will likely be an after-hours mover too. If it rallies, I would have an eye on the declining 10-week and 50-day moving averages.
This was stout resistance a few weeks ago and may be so again. Above that, keep an eye on the $139 to $143 area. This $4 range was prior support that turned to resistance.
On the downside, though, the $100-ish area has been support. See that that remains the case should shares decline.
Top Stock Trades for Tomorrow No. 3: Halliburton
Halliburton (NYSE:HAL) tried to rally on earnings but just couldn’t maintain momentum with oil down more than 5% on the day.
Looking at the chart though, this name looks incredibly healthy still. On a dip, let’s see if the 10-day acts as support. If not, the $39 breakout area and the 21-day moving average may be on tap.
Like other stocks in the space, I want to be a dip buyer with these names. If the first dip fails, I will turn my attention to the next area until the market says it’s time to move on from energy.
On the upside, however, a close above $43 could eventually open the door to the $48 to $50 area.
Top Trades for Tomorrow No. 4: S&P 500 (SPY)
I wanted to look at the S&P 500 ETF (NYSEARCA:SPY), as it tries to find its footing near current levels. Tuesday’s daily-up rotation has really paid off. Now the question is whether it can maintain momentum.
The SPY ETF has been chopping between $438 and $444 for the last week or so. The 10-day has been active resistance, so if the SPY can clear this hurdle, it opens the door up to the 200-day and 21-day moving averages near $448.50. Not to mention, this would be the 50% retracement of the current range.
Even though a rally of that magnitude may prove to be a selling opportunity, it’s one that investors should still respect.
Below $443 keeps the SPY below active resistance and thus, technically keeps $438 on the table. Below that level puts this week’s current low of $435.61 in play, followed by $433.50.
On the date of publication, Bret Kenwell held a long position in ROKU. 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.