Stocks initially rallied on the CPI report that was released before the open. However, a selloff in the bond market later in the day weighed on an already fragile equities market. With all of that in mind, let’s look at a few top stock trades for tomorrow.
Top Stock Trades for Tomorrow No. 1: Walmart (WMT)
Not only has Walmart (NYSE:WMT) been one of the stronger retail stocks in the market, but it’s been one of the stronger stocks overall.
This stock gave us a powerful breakout over the $152 level, surging higher in 11 out of 12 sessions. Now cooling off, we have a pullback into that prior breakout level and rising 10-day moving average.
It’s a solid risk/reward proposition. If it holds, $156 could be in play on a rebound, followed by the highs near $157.50. Ultimately, bulls are looking for a rotation to the upside, putting $165 to $170 in play.
If support does not come into play, then $150 and the 21-day moving average is next in line. Below that and active bulls will likely pass on Walmart.
Top Stock Trades for Tomorrow No. 2: Semiconductors (AMD, NVDA, SMH, TSM)
We have been looking at Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) over the last week as these stocks have been breaking down. So, why not look at the VanEck Semiconductors ETF (NASDAQ:SMH)?
This concerns me, as semis are an economic barometer. To see them taking a bath does not give me a lot of confidence at the moment.
As it trades below last week’s low and flirts with losing last month’s low at $237.32, we have to turn our attention to potentially lower prices. If bulls don’t come in and support the SMH, we could be looking at a drop down to the $225 area, which was a significant breakout area in 2020 and support in 2021.
Now, if the SMH can bounce above $250, look for a test of the 10-week moving average.
Note: Taiwan Semiconductor (NYSE:TSM), the SMH’s second-largest holding, will report earnings Thursday morning.
Top Stock Trades for Tomorrow No. 3: Delta Air Lines (DAL)
Speaking of earnings, Delta Air Lines (NYSE:DAL) will report earnings tomorrow morning. The stock has been mixed lately.
After a recent rally, it was rejected by the 200-day. Recently though, DAL stock has found its footing. From here, keep an eye on the 200-day and the March high near $40.25.
A rally to this area is at risk of a “sell-the-new” fade. If it doesn’t fade and/or gaps above this zone, it could open the door to the $42.50 to $43 area. Above that and $45 to $46 is in play.
On a bearish reaction, however, keep $36 and the daily VWAP in mind. A break of these measures could put the gap-fill level in play at $33.20.
Top Trades for Tomorrow No. 4: AbbVie (ABBV)
Last but not least is AbbVie (NYSE:ABBV), which has been a perennial powerhouse when it comes to relative strength.
The stock is dipping to the 10-day moving average, which had our attention this morning. If bulls can get a daily-up rotation over today’s high, then $172.25-ish could be on the table.
Above that puts $176 in play, then $180 to $182 if AbbVie really gets going.
If the stock breaks below Tuesday’s low, though, we could be looking at a test of the 21-day and last week’s low. Either way, we want to try buying dips in this name given its recent strength.
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.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.