It was a bumpy session that ultimately resolved lower, despite the Fed’s latest stimulus plans. That said, here are a few top stock trades to start the week.
Top Stock Trades for Tuesday No. 1: Roku (ROKU)
Roku (NASDAQ:ROKU) shares exploded higher on Monday, up more than 18% at one point. It looks like investors are finally realizing that the coronavirus from China is going to lend a serious boost to streaming video. Or maybe they felt the stock had just gotten too cheap.
In any regard, Roku stock is filling its gap up toward $90. Let’s see if it can continue higher, possibly up toward that $95 to $98 zone. Above that could put $100-plus in play.
Should one of these levels acts as resistance, though, a move lower may be back in play. That’s particularly if true the S&P 500 continues lower. So for Roku, keep an eye on the $70 level. Below puts the 2020 low in play, near $58.
Top Stock Trades for Tuesday No. 2: Zoom Video (ZM)
It’s been off to the races for Zoom Video (NASDAQ:ZM), which eclipsed $160 and hit a new high on Monday. Almost every other stock has been under pressure, but not Zoom.
If you were lucky enough to follow this trade, you’ve hit a double thus far. I wouldn’t get too greedy though. Up here, I’d consider taking some of this trade off. This type of return is phenomenal in a regular environment, but is particularly impressive in this type of tape.
On a move back back down, see if $130 buoys Zoom at all. Below puts $100 back in play.
Top Stock Trades for Tuesday No. 3: Boeing (BA)
Boeing (NYSE:BA) shares keep trying to carve out a bottom. The stock continues to find buyers in the low- to mid-$90s, corresponding with the lows from 2016. Now back over $100, bulls want to see if this deeply oversold stock can find some upward momentum.
On the chart, it’s clear as day how oversold this stock is. Put another way, Boeing would need to rise about 170% just to hit the 200-week moving average. But let’s aim more realistically. The $135 to $140 area is the first upside target I’d have on my radar. That gives buyers at $100 about $35 to $40 of potential upside vs. about $10 in downside.
However, buyers must also accept the balance sheet risk and understand they are in a somewhat binary situation as it pertains to Boeing receiving federal aid. Binary situations are not for me, and thus, I personally wouldn’t trade Boeing. But this is the setup the charts show me now.
Top Stock Trades for Tuesday No. 4: Lululemon Athletica (LULU)
An excellent brand, Lululemon Athletica (NASDAQ:LULU) stock has been taken to task over the past few weeks. Unfortunately for longs, it’s not one of the few retailers that are doing well in the current environment.
Sheesh, at its trough, Lululemon stock was down about 50% from its recent high.
In any regard, last week’s decline toward $130 looked attractive, but it needed to fall just a bit further to be a true buy. Down between $110 and $120, and LULU stock should have had some major support. Not only was this level prior breakout support in 2018, but the 200-week moving average is also nearby at $117.50.
On the upside, see if the stock can reclaim its 100-week moving average. That’s also about where the 38.2% retracement for the current decline comes into play. It’s struggling to reclaim this area thus far, but over it and $200 is technically possible.
Top Stock Trades for Tuesday No. 5: Dow Jones (DIA)
Here we have the Dow Jones Industrial Average, which most investors trade via the SPDR Dow Jones ETF (NYSEARCA:DIA).
As you can see on the chart, the index has now given up all of its post-election gains from almost four years ago. Almost four years of profits gone in about four weeks. That’s madness.
On the bright side, this 18,000 to 18,750 zone is big. While that 750 point spread may seem like a lot now, it’s not even one day’s trading range anymore. Case in point, Monday’s low is 948 points off Friday’s close.
Given how oversold we are here, I wouldn’t be surprised to see a bounce at some point. Will that be enough to get the Dow back over 21,000, perhaps up toward 21,750? Maybe. I also wouldn’t be surprised to see this level act as resistance, either.
We don’t know when or at what level the market will bottom. For now though, keep an eye on this zone and see if it acts as temporary support.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, he is long ROKU.