5 Top Stock Trades for Tuesday: MSFT, DIA, SHAK, PENN, PLAY

Stock Market

Another volatile session rocked Wall Street on Monday, with stocks going limit down and trading halted just seconds into the session. That said, let’s look at a few top stock trades for Tuesday.

Top Stock Trades for Tomorrow No. 1: Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) shares have been hammered from the highs, but not like some you’ll see in a moment. In any regard, shares have slumped over the past month and now sit on a prior breakout level.

This level buoyed the stock on Friday, as shares reclaimed the 200-day moving average. On Monday, that moving average is acting as resistance, while $140 is holding as support.

Below this level, though, and $130 quickly becomes a possibility. If selling pressure amps up, it’s unlikely that Microsoft will be able to hold support. If it does, see if the stock can reclaim the 200-day moving average. Above that, and $160 is on the table.

Top Stock Trades for Tomorrow No. 2: The Dow (DIA)

The Dow Jones is taking the selloff on the chin, with the SPDR Dow Jones ETF (NYSEARCA:DIA) down about 30% from its 52-week highs last month.

Last week, the DIA was able to close north of its 200-week moving average thanks to Friday’s robust recovery. However, short of that late-day rally into the weekend, this ETF remains deeply concerning.

The stock is the most oversold it’s been in five years (on a weekly basis), and it’s now below the 2018 low. Will it give up all of its gains from this election cycle? Maybe. That would drop the DIA down to about $170.

Short of accumulating the DIA for a long-term hold, buying now is akin to catching a falling knife. Reclaiming and holding the 2018 low is step one, followed by a test of the 200-week moving average.

Top Stock Trades for Tomorrow No. 3: Shake Shack (SHAK)

Shares of Shake Shack (NYSE:SHAK) are down nearly 70% from the 2019 highs to Monday’s low. However, that low comes into play near long-term support between $30 and $31. Below $30, though, and Shake Shack can continue to slide lower.

Is Shake Shack the best buy? Not necessarily, but investors who have waited patiently for a long-term position in the name may consider buying with support so close.

On a rebound, however, see if it can hit $40. Above puts the 200-week moving average near $50 in play.

Top Stock Trades for Tomorrow No. 4: Penn National Gaming (PENN)

Penn National Gaming (NASDAQ:PENN) has been clobbered. The stock is down 78% from its recent high last month. Some of these moves are rarely, if ever, seen in “normal” stocks with a black swan event like we’re seeing now.

Some investors may be looking to bottom-fish Penn. Maybe it works, but if I’m buying anything now, it’s high-quality stocks. Something I know that has staying power even if it’s being irrationally sold lower.

From a technical perspective, I need to see how Penn handles $12 if and when it rebounds. $12 is the 2016 low and roughly where the 200-month moving average comes into play. Above $12 puts the $15 to $18 range in play, with $20-plus possible above that.

On the downside, though, $6 to $7 is possible should the selling pressure keep up.

Top Stock Trades for Tomorrow No. 5: Dave & Busters (PLAY)

Dave & Busters (NASDAQ:PLAY) is also taking it on the chin. PLAY stock ended Monday’s session down more than 45%. And from its 2020 high, shares are — gulp — down 85%.

Like Penn, Dave & Busters stock is just a bloodbath right now.

At this point, PLAY stock can only go so low, but buyers don’t know when it will bottom. Could it fall another 50% to $3.60? Of course it could. It fell 45% today, so anything is possible.

On the upside, let’s see if PLAY can reclaim $10, triggering a potential upside move to $15-plus. It’s closest prior support level is all the way up at $28, almost a four-bagger from current levels.

Man, and it’s only Monday. Do not take outsized risks in this market.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.

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