After ripping higher off the lows on Thursday, the market set us up for a rug-pull on Friday, with equities diving on the day. Let’s look at a few top stock trades heading into next week.
Top Stock Trades for Tomorrow No. 1: S&P 500 ETF (SPY)
On Friday, the SPDR S&P 500 ETF (NYSEARCA:SPY) took a hit, falling 1.8% toward the end of the trading day. The move sent the SPY tantalizingly close to its 50-day moving average.
A test of this mark becomes important now, as we need to see how it reacts when it gets there. Does it result in a spunky bounce or is it met with a tepid rally? Does it hold at all?
We need need answers to these questions so we get can get an idea about sentiment. The 50-day moving average comes into play near $320, which was a notable level of support in December. It’s also the 78.6% retracement from the June low to the recent high.
Falling below that puts the 100-day moving average on the table, and potentially the 61.8% retracement near $310. On a rebound, see if SPY can reclaim the 20-day moving average or if it acts as resistance.
Top Stock Trades for Tomorrow No. 2: Facebook (FB)
Facebook (NASDAQ:FB) was under pressure Thursday after reporting earnings, and a rally from FANG peer Amazon (NASDAQ:AMZN) wasn’t able to generate a sympathy rally, with FB declining again on Friday.
Shares are now below prior resistance between $203 to $205, the 50-day moving average and uptrend support (blue line). That’s not good. If shares lose $200, traders will likely expect a test of the 200-day moving average.
If it can work back up to over $205 then FB needs to reclaim the 50-day moving average.
Top Stock Trades for Tomorrow No. 3: Luckin Coffee (LK)
Luckin Coffee (NASDAQ:LK) shares tanked on a short report, but have since rebounding significantly from the lows. And no, today’s candle is not a misprint on the chart above.
That said, Luckin did lose the $34 level and the 50-day moving average. This name is even dicier due to it being a Chinese business, which is surely going to be impacted by the coronavirus. For many, this makes LK stock a no-touch and understandably so.
For those looking at it, though, see how it handles $34 and the 50-day moving average. It will be key to see whether Luckin reclaims these marks or finds them to be resistance. If it’s the latter, it puts the $28 to $29 area on watch, which briefly broke on Friday.
Below that and $26 remains a notable level. If LK stock falls below all of these marks, investors may want to see where support comes in before getting long as a trade.
Top Stock Trades for Tomorrow No. 4: Caterpillar (CAT)
Caterpillar (NYSE:CAT) stock hasn’t looked good lately, and Friday’s post-earnings action didn’t help matters.
After shares gapped below $137.50 on Monday, they failed to reclaim this notable area. They have since slipped even lower and on Friday, are losing the 200-day moving average. It seems a little early to call for a decline to $121, but that’s what could be in the cards should CAT remain under pressure.
On the plus side, that would fill the October gap. Moving above the 200-day keeps $137.50 on the table. But for longs, it’s hard to trust CAT below this mark.
Top Stock Trades for Tomorrow No. 5: Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is a pretty straightforward setup, despite the latest bout of volatility.
From here, I would love to see a retest of Monday’s low near $232. There it also has uptrend support (blue line) and the 50-day moving average. A drop to this area gives active bulls a reasonable risk/reward dip-buying spot.
Falling below that signals that more caution may be needed. On a rebound — either from current levels or after a retest of this week’s low — see if NVDA can reclaim the 20-day moving average.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMZN and NVDA.