After a painful decline on Tuesday, the market gave investors the rebound they were looking for Wednesday. With that in mind, let’s buckle down and look for a few top stock trades going into Thursday.
Top Stock Trades for Tomorrow No. 1: Lululemon (LULU)
Down for three straight sessions ahead of earnings, Lululemon Athletica (NASDAQ:LULU) isn’t faring well after the print.
Shares slipped 7.4% on the day, gapping below the 50-day moving average and uptrend support (blue line). The selling pressure is also pushing LULU below $320, a notable breakout level from July.
This leaves traders in somewhat of a conundrum when it comes to Lululemon. It’s not really down into a meaningful level of support that’s holding, but it’s not giving us any signs of a reversal (even on a strong market day).
I’d love to see a deeper dip in LULU now, perhaps down into the $285 to $300 zone. Below could push it even lower, perhaps down toward the 200-day moving average, which would be a solid buying opportunity (at least, at this point).
If Lululemon stock finds its footing before such a dip occurs, look to see if the stock can reclaim the 50-day moving average. Above puts the 161.8% extension in play near $351. Above that puts the 20-day moving average on the table near $365.
Top Stock Trades for Tomorrow No. 2: Boeing (BA)
Boeing’s (NYSE:BA) price action is comprised of a series of lower highs, as downtrend resistance continues to squeeze shares lower (blue line).
Earlier this week, the $165 to $170 area gave way, as the stock now scrambles to find support. The fact that Boeing isn’t completely breaking down is surprising — and good — but it’s not exactly shouting “confidence” from the rooftops.
On a further decline, see if BA rotates below the August low at $153.41. Just below that is the 23.6% retracement at $150.10. Below that and Boeing is in no man’s land.
On the upside, though, let’s see if Boeing can reclaim $170, followed by the 20-day and 50-day moving average. To be a buyer on the upside (as opposed to on a dip), I believe I’d want to see a rotation over last week’s high near $180.
Otherwise, buying on a rally can be too sloppy and frustrating. Over last week’s high will give bulls more clarity.
Top Stock Trades for Tomorrow No. 3: American Eagle Outfitters (AEO)
American Eagle Outfitters (NYSE:AEO) is down slightly after reporting earnings, but finished the day 1.6% higher. This comes down to two areas now, though.
If AEO stock can push higher, it needs to clear $13.50. One can see quickly and easily that this level has been very relevant over the past year. Above opens the door to the $15 to $16.50 area.
If $13.50 remains resistance, however, we have to consider the downside. Specifically, a rotation below last week’s low at $12.22 puts the $11.15 to $12 area in play. There AEO finds its 20-day, 50-day and 200-day moving averages, as well as uptrend support (blue line).
Top Trades for Tomorrow No. 4: Zscaler (ZS)
Zscaler (NASDAQ:ZS) will report earnings after the close, and shares have already suffered a quick pullback.
For now, the 50-day moving average and uptrend support (blue line) continue to hold as support. Obviously this would be a great dip-buying opportunity if earnings weren’t in the way.
On a bearish reaction, see if the 261.8% extension (from the March low to the February high) acts as support near $115. Below could put the $98 to $100 area in play, followed by the 161.8% extension near $85 and the 200-day moving average.
On the upside, see if ZS can reclaim the 361.8% extension near $147. Above technically puts the all-time high in play at $163.80.
Top Trades for Tomorrow No. 5: Coupa (COUP)
Coupa Software (NASDAQ:COUP) has been hammered over the last five days. Shares are down 26.5% from its highs in that span, punctuated by Wednesday’s 5.9% decline.
For now, the two-times range extension is acting as support. Aggressive buyers who like COUP can buy it against Wednesday’s low. Below that may put the $240 breakout level in play, followed by the 161.8% extension near $225.
On the upside, I need to see Coupa reclaim $280. This was a strong range support level over the last few months. Above it puts the 20-day and 50-day moving averages in play near $300, followed by $320, which was resistance, then a breakout level, last month.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.