After three straight 80%-plus upside days, the stock market is taking a much-needed breather on Tuesday, which I find healthy. With that in mind, let’s look at a few top stock trades for Wednesday.
Top Stock Trades for Tomorrow No. 1: Amazon (AMZN)
Amazon (NASDAQ:AMZN) has made it quite clear that there’s support just above the key $2,000 area. That comes as little surprise, but the weekly charts confirm it with three straight weekly bounces off this zone before Tuesday’s rotation higher.
Now pushing to the upside, keep a close eye on this stock. That’s as it approaches the key $2,500 to $2,550 zone. In that area, bulls find the monthly VWAP measure, the 10-week and 200-week moving averages and the 38.2% retracement.
That’s a pretty significant zone. If it can push through it, it opens the door up to the $2,850 to $2,900 area.
If it fails, I’d love to see support near $2,250. Should support fail to materialize, we could retest the low.
Top Stock Trades for Tomorrow No. 2: Corteva (CTVA)
Corteva (NYSE:CTVA) has a great setup, as it’s been powering to new highs despite market-wide turmoil.
I’m keeping an eye on this one to see if it can retest the prior breakout level and reset at the 10-day moving average. If it does, it gives bulls a great risk/reward setup on the long side.
That doesn’t guarantee it will bounce, but there are worse ideas than buying relative strength stocks on the dip with a controlled risk amount. If it fails, we could see a test of the 21-day and 50-day moving averages near $58 to $59.
On the upside, $62.50 and $64 are the upside bounce areas to watch.
Top Stock Trades for Tomorrow No. 3: Salesforce (CRM)
It may be the first day back from a long holiday weekend, but that doesn’t mean it will be a quiet day as Salesforce (NYSE:CRM) gears up to report earnings. The stock has been crushed in a seemingly undeserved way.
That said, it’s been basing nicely in the mid-$150s, just below the monthly VWAP measure.
If it can power through this measure and the declining 10-week moving average, there’s a fairly clear shot up to the $190 to $200 zone. In that area it finds a lot of hurdles, including the 23.6% retracement, the 200-week and 21-week moving averages and a prior support zone turned into resistance. Above that could put the $220s in play.
On the downside, a break of support and $150 could put the mid-$140s in play. However, that matters a lot less than $155 breaking, which has been very key these last three weeks.
Top Trades for Tomorrow No. 4: Energy ETF (XLE)
Last but certainly not least is the Energy Select Sector SPDR ETF (NYSEARCA:XLE). Without a doubt, this has been the strongest sector in the market and we’ve seen it burst to life over the last few weeks and push to fresh highs.
That said, it lost some steam on Tuesday. If we can get some more pressure, it could put the $84.50 level in play, which sits right near the rising 10-day moving average.
This would be bulls’ first area of interest to buy the dip — seeing as though it’s on a test of active support (the 10-day) and on a retest of the prior high ($84.57). If support is tested and holds, bulls can look at $87.50 to $88 as their first trim spot.
If support fails, we may see the 10-week and 21-day moving averages tested, but that’s not our concern right now. Our concern is the short-term trend.
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.