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5 Top Stock Trades for Thursday: TLT, WW, CVS, NVTA, MU

Bret Kenwell

When volatility picks up, the moves get wild on both ends of the spectrum. In pre-market trading, the markets were set for another nice open, but traders suddenly found U.S. indices down about 1.5% going into the open. By the afternoon, equities were green. Let’s look at some top stock trades in that mix.

Top Stock Trades for Tomorrow #1: Bonds

top stock trades for Bonds

As you can see in the image above, there has been a flight to U.S. bonds, thus jolting the iShares 20+ Treasury Bond ETF (NASDAQ:TLT) higher by almost 10% in just a few trading sessions. Heck, just look at the volume from the last few days. It’s impressive, but looking exhausted.

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Now look at the weekly chart below, looking at the last four years.

top stock trades for TLT

Notice the orange line up at the top of the chart. This is the RSI, which measures the overbought and oversold condition of a particular security. The TLT has only been this overbought two other times in the past four years. Each other time it’s led to a substantial correction.

Talk to any semi-seasoned trader though and they’ll be quick to point out that the RSI alone is not reason enough to take a trade. But when sentiment is at an extreme and shares begin to act irrational, a temporary high/low may not be far off.

Notice how seemingly everyone’s become a currency and yield-curve expert over the past week? That’s not a coincidence. This week, TLT blew out of its channel, but looks like it could be topping.

Look for a check-back down one of three areas: prior channel resistance near $137, the 10-week moving average now at $133 and climbing or range resistance at $133 (black line).

Top Stock Trades for Tomorrow #2: Micron

top stock trades for MU

Micron (NASDAQ:MU) took a tumble on Wednesday but was at least able to rally off the lows. Between the 20-day and 50-day moving averages now, let’s see what’s next before jumping in on MU.

A further correction could send shares to $39, where it has the 50-day and 200-day moving averages. It also found this level as support in July.

On a rally, see if it can reclaim the 20-day moving average. More importantly though, see how it handles the $44 to $45 area, a major zone of resistance in 2019. Over it puts the July highs back on the table.

Top Stock Trades for Tomorrow #3: Weight Watchers

top stock trades for WW

Weight Watchers (NASDAQ:WW) erupted on Wednesday, climbing some 40% after the company reported earnings. Sheesh!

Anyway, longs need to be careful. As if buying a 40% move isn’t dangerous enough, WW is running right into its 200-day moving average. It’s also hitting short-term channel resistance, although it’s possible it breaks out.

Over the 200-day sets up a potential rally for more gains, though. If it does, look for a move up to the $34.30 to $35 area. Although not pictured on the daily chart above, that’s where WW will run into the 50-week and 200-week moving averages.

If the 200-day acts as resistance, see how $25 holds as support on a potential pullback.

Top Stock Trades for Tomorrow #4: CVS Health

top stock trades for CVS

Like it or not, CVS Health (NYSE:CVS) continues to slowly but surely improve. The stock is erupting more than 7% on strong earnings. Should shares finish strong on the day, it will be a perfect red-to-green candidate.

For swing traders and investors, the stock continues to buoy nicely along channel support, making a perfect test just yesterday. Now up over $57, I want to see CVS hold above this zone. However, below $56 and the 20-day moving average may put channel support back in play.

Should shares continue higher, look for a test of $60. That’s where CVS will find channel resistance and the 200-day moving average.

Top Stock Trades for Tomorrow #5: Invitae

top stock trades for NVTA

Invitae (NASDAQ:NVTA) reported a really great quarter and rose nearly 20% in after-hours and pre-market trading. Those gains did not translate to the regular session though. The stock was up more than 13% at one point, but those gains have been axed in half toward the close.

If NVTA can hold up over $25, I’d consider it a positive development. Over Wednesday’s high could easily send it to $30 if the broader market is cooperating. Below the 20-day and uptrend support, and NVTA may be headed to the 50-day currently at $22.33.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long NVTA. 

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