U.S. stocks started off with a bang on Wednesday, following European and Asian stocks higher in morning trade. However, the market is barely holding onto its gains as the close nears, leaving some investors to wonder if we need a few days of rest. We’re not overbought yet, but some consolidation is never a bad thing. Let’s look at some top stock trades in the meantime.
Top Stock Trades for Tomorrow #1: GameStop
GameStop (NYSE:GME) shares initially tumbled after reporting fourth-quarter earnings. While earnings topped estimates, revenue came up short and GME stock hit a new 52-week low below $9 a share. On the short-term chart above, you can see where the name gapped lower on the day before reversing higher and paring its losses to just 4%.
However, its inability to get back above $10 and back into its prior downward channel is concerning. Even if it does, bulls don’t have a very optimistic case to make until GME can get back over the 20-day moving average and downtrend resistance.
On the long-term chart below, this channel is highlighted with a purple line.
While it looked like GME was breaking out of this long-term bearish channel in 2018, the stock found its way back into it earlier this year. If it losses $9.50, GME could retest its lows and possibly trade down to its channel lows below that.
Top Stock Trades for Tomorrow #2: Micron
Shares of Micron (NASDAQ:MU) are starting to get some love, as the stock gaps higher on Wednesday. The stock is now running into that $44 to $45 resistance zone on the chart though and even though it’s not overbought, some caution may be warranted.
Micron has been putting in a series of higher lows and bobbing along the 50-day moving average and uptrend support. Short of some unexpected bad news, bulls will likely pounce on this area again should MU stock pullback.
A push over resistance can propel MU up to $46.60, the 50% retracement for the 52-week range. Above that and $50+ is eventually possible. If the 50-day and uptrend support give way, bulls will need to wait for Micron to reset.
Top Stock Trades for Tomorrow #3: Alibaba
I try to keep it simple when it comes to trading and Alibaba (NYSE:BABA) is the perfect example. Shares broke out over short-term resistance a fews days ago, only to pullback on Wednesday.
However, that pullback reclaimed the breakout zone and held short-term support. If it gets back above the 20-day, there’s a good chance this one will see $185+ again. Investors can use a close below the 50-day as their stop-loss.
Top Stock Trades for Tomorrow #4: Nvidia
Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) may be getting the most love today, but don’t forget about Nvidia (NASDAQ:NVDA). Shares continue to move nicely and are hitting new 2019 highs with Wednesday’s rally.
Given the not-great earnings report Nvidia gave us in February, one could argue that this rally has gone too far. But I’m not here to debate the fundamentals, I’m here to trade the technicals. Last month we said investors could stay long NVDA so long as $170 held as support, (the AMD trade was in there too!).
This level held perfectly and we’re now at $190. Nvidia is now on the cusp of an overbought condition, technically speaking, but that doesn’t mean a run up to ~$200 can’t happen — either now or in the future.
$200 would fill the gap for Nvidia and put shares $70 above the February lows. It would also likely run the stock into its 200-day moving average and mark a good place for swing traders to book some gains. That said, shares may be running into channel resistance near current levels, as well as the 38.2% retracement, warranting a few investors to book some gains.
Top Stock Trades for Tomorrow #5: Tesla
Tesla (NASDAQ:TSLA) has been an excellent trading vehicle for us so far this year. After giving us that perfect bounce off its major support zone, Tesla stock is flirting with a big-time breakout here.
On daily-range basis, Tesla stock is still testing its breakout mark. On a closing basis, it’s technically breaking out (thinner black trendline). As it struggles to hold over the 50-day moving average, I’m more inclined to put Tesla in the “prove it” camp than the “benefit of the doubt” camp.
In that regard, a move over the 50-day and Wednesday’s high kickstarts the move up to, and perhaps over, $300. If that’s the case, we can easily see a squeeze up to the 200-day moving average. If it can’t breakout, bulls need to see Tesla notch a higher low on this recent rally. Otherwise, new 2019 lows are possible.
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