After a tough week, stocks put together a decent rally on Friday. Let’s look at a few top stock trades going into next week, the last week of September.
Top Stock Trades for Monday No. 1: Rite Aid (RAD)
Rite Aid (NYSE:RAD) shares are under significant pressure for the second straight day. The stock ended the day down about 9% on Friday, after falling almost 18% on Thursday on earnings.
The stock made a decisive close below the September low on Thursday and the selling is continuing on Friday. Now, there are two levels to keep an eye on.
That puts the March low in play at $9.24, followed by the December gap-fill at $8.36.
On the upside, investors must see if RAD stock can reclaim $11. If so, it puts the 20-day moving average in play, followed by the 50-day and 200-day moving averages. However, at current levels shares are sort of in no man’s land until it can either reclaim some higher levels or decline further.
Top Stock Trades for Monday No. 2: Norwegian Cruise Line (NCLH)
On Monday, Norwegian Cruise Line (NYSE:NCLH) gapped below the 50-day moving average, then struggled to reclaim that mark all week.
On Friday, though, Norwegian gapped higher by more than 13% and reclaimed the 50-day moving average and uptrend support (blue line). Reclaiming a key area is attractive, but this one is no layup.
From here, let’s see if bulls can reclaim the 20-day moving average. If so, it puts the $18.75 area in play, followed by the 23.6% retracement at $19.48. Above that opens the door to a possible rally toward the 200-day moving average and the June high near $27.
On the downside, however, be cautious on a close below the 50-day moving average. Below this week’s low (at $14.15) puts the August low in play at $12.56.
Top Stock Trades for Monday No. 3: Penn National Gaming (PENN)
Penn National Gaming (NASDAQ:PENN) has been volatile lately. No, it’s not because of the volatility in the overall market, but rather, thanks to a secondary offering. In fact, shares had been holding up well before that news.
For now, though, shares are rebounding and reclaiming the 10-day moving average. On the upside, I want to see if shares can back push up to $75. That’s around the two-times range extension and the current all-time highs.
Above that may open the door to a longer term price target near $96.50 — the 261.8% extension.
On the downside, a break of the two-day low at $62.25 and the 161.8% extension could put the 50-day moving average in play. Below that may open the door to a larger correction down toward $40. To get to $40 would likely take a broader market correction as well.
Top Stock Trades for Monday No. 4: United Health (UNH)
UnitedHealth Group (NYSE:UNH) has been under pressure this month. However, it’s been carving out a low near $292 this week.
Look at the last five days of action. Shares had a responsive bounce back to $300 on Monday. Then slowly churned its way down toward $290 and gave us a doji stick on Thursday, which can be indicative of a reversal.
Once we got the doji-and-up — when UNH took out Thursday’s high (the doji day) on Friday — momentum began to return. Buyers drove it to the 10-day moving average, where we now wait for a decision.
Above $300 opens the door to the 50-day moving average. Above that and $320 is on the table. If UNH can’t reclaim the 10-day moving average it keeps $290 and the 200-day moving average in play.
A close below the 200-day moving average could put $275 on the table, the double-bottom low from May and June.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.