The stock market got off to a robust start on Tuesday, jumping on stronger-than-expected retail sales and hopes over a novel coronavirus treatment. With all of that mind, let’s look at a few top stock trades going into Wednesday.
Top Stock Trades for Tomorrow No. 1: Roku (ROKU)
Roku (NASDAQ:ROKU) came roaring back to life on Tuesday, jumping more than 12%.
Amid that move, shares reclaimed the 20-day and 50-day moving averages, after a couple of nice hammer candles over the past two weeks (shown on the chart with black arrows).
If Roku can reclaim the 200-day moving average, it puts the $130 to $135 area in play. Above that opens up upside toward the $145 to $150 area. That is, unless the stock is in play for mergers and acquisitions, as some investors seem to be speculating.
On the downside, however, look for a move below the 50-day moving average. Below puts the weekly low near $104 in play. Below that, and $100 or lower could be possible.
Top Stock Trades for Tomorrow No. 2: U.S. Steel (X)
U.S. Steel (NYSE:X) is ripping on the day on news of a potential infrastructure bill. Of course, steel companies would benefit from such legislation.
In the middle of the range now, U.S. Steel has pretty clear resistance and support levels. On the upside, watch $11. That was resistance earlier this month, and a move over it would unlock potential upside toward $12.50.
On the downside, though, keep an eye on $9.85. Not only has this level played a role over the past few quarters, but it’s where X stock finds the 200-day moving average. Below the 200-day puts the 20-day moving average and uptrend support (blue line) on the table.
If there’s further talk — or negative reports — on the infrastructure plan, then X stock could be a big mover.
Top Stock Trades for Tomorrow No. 3: Kroger (KR)
Typically known for its lack of volatility, Kroger (NYSE:KR) stock was very volatile in February and March. Shares initially ripped higher as consumers were “pantry hoarding,” before dipping again in March.
However, the stock has been tightening in a narrowing range over the last few months. The 50-day moving average is, for the most part, holding as support. But for bulls to really gain momentum, Kroger needs to clear the $33.50 area.
There it finds short-term downtrend resistance (blue line), as well as multi-month resistance. If it can clear these marks, it puts $36 back in play. Over that, and $40 is possible.
Nonetheless, a move below the 50-day moving average and uptrend support could put $30 and the 200-day moving average in play.
Top Stock Trades for Tomorrow No. 4: iQiyi (IQ)
iQiyi (NASDAQ:IQ) stock put together a stunning move on Tuesday, jumping almost 40% at one point. Despite fading from those highs, IQ stock still finished the day up more than 25%.
Shares approaching the $27 to $28 area met resistance, just as they did in February 2019 and February 2020.
On Monday, IQ stock broke out over downtrend resistance (blue line) but stalled at the 200-day moving average. Tuesday’s move puts investors in a tough spot. With such a big fade from resistance, it’s hard to step up and be a big-time buyer. At the same time, though, it’s still several dollars away from resistance.
For now, the 61.8% retracement is acting as support. By the charts, one could justify a long position over this mark. A close below negates the long setup, and potentially puts the 200-day moving average on the table. If the 61.8% retracement holds as support, a retest of resistance is possible, provided IQ can take out Tuesday’s high at $26.45.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret is long ROKU.