It was a choppy day on Wall Street, as investors find their footing with the S&P 500 still at new highs. With that in mind, here’s a look at a few top stock trades as we approach mid-week.
Top Stock Trades for Tomorrow No. 1: Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) continues to bubble higher, but has held back on breaking out. That’s despite the big moves we’ve seen (and flagged) and in other mega-cap tech names.
If the stock can clear this area of resistance with authority, I would look for a potential move up to the $225 area, where it finds the 161.8% extension.
On the downside, though, a shallow dip may be met by buyers at the 20-day moving average. However, the setup remains bullish provided that the 50-day moving average and uptrend support (blue line) remain intact.
And as long as Microsoft is above these levels, I find it hard to get bearish on the name.
Top Stock Trades for Tomorrow No. 2: DraftKings (DKNG)
You had to be quick to nail the move in DraftKings (NASDAQ:DKNG), which went from a modest 1% to 2% gainer in the opening minutes of trading, to a 9% gainer. Those on Twitter (NYSE:TWTR) at least had a chance.
In any regard, what’s so attractive about this stock?
After last week’s high, DKNG stock had several down days into moving average support — where it promptly put together a notable reversal. Then, early on Tuesday, it rotated over Friday’s high.
That was my first trigger. Then, it went weekly up at $38.17, before then going monthly up at $38.84. And after DraftKings stock closed above these marks, putting $40 to $42 in play. Above $42, and the all-time high at $44.79 is on the table.
Like Microsoft, this one is healthy even on a notable dip. And until a break of uptrend support, I still like DKNG stock. Especially if shares remain above 20-day and 50-day moving average.
Below these marks, however, and uptrend support puts the August low in play at $30.51 — followed by the $28 area.
Top Stock Trades for Tomorrow No. 3: Fastly (FSLY)
Fastly (NYSE:FSLY) is getting investors’ attention.
Last Thursday (Aug. 20), Fastly rallied 11.8%. As the stock was hugging the 50-day moving average for almost two weeks, this rally thrust shares clearly above that measure.
Now, though, the stock continues to struggle with the 20-day moving average and is again retesting the 50-day moving average.
It’s like the bulls all want to take Fastly higher, but are all afraid to go first. Thus, here’s what we need to see: Fastly needs to close above last week’s high at $92.19.
If it can do that, it puts the post-earnings high in play at $94. Anything above that, and the stock can begin filling its gap all the way up toward $109.
On the downside, however, a break of the 50-day moving average puts range support back in play near $72 to $75.
Top Stock Trades for Tomorrow No. 4: Target (TGT)
Target’s (NYSE:TGT) post-earnings reaction is reminiscent of a tech stock. I really like the way this “high-and-tight” formation is setting up, even if shares are somewhat overbought and are extended at this point.
The stock rallied hard into earnings, but burst to new highs earlier this month on much better-than-expected results. The stock continues to consolidate above the 161.8% extension, as bulls gobble up each and every little dip in the stock.
I like this one of two ways now, and both are on the long side. I like Target on a pullback into its rapidly climbing 10-day moving average, or on a move over $156.10 — last week’s high. A close above that technically puts the two-times range extension in play near $167.
I suppose, technically, a short setup is in play on a move below the gap-up low (at $146.54 and the 10-day moving average). But it’s likely only good for a gap-fill and/or test of the 20-day moving average.
We’ll see how the trade unfolds, but I much prefer to buy the dips of strong stocks amid market uptrends then sell them.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret is long MSFT as a trade and FSLY as an investment.