There’s no other way to put it: the stock market was crushed on Thursday. That said, let’s look at a few top stock trades amid the carnage.
Top Stock Trades for Tomorrow No. 1: Dow Jones (DIA)
The indices were hammered with relentless force on Thursday. Downside volume was very heavy and does not bode well for bulls at the moment. That said, we’ve seen a huge rally in the equity markets, and letting some air out — even in violent fashion like today — may do it some good.
The SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) couldn’t quite get up to that massive gap-down from February. Unfortunately, it started off Thursday with a nasty gap-down — somewhat reminiscent of the one in February to be honest — as shares blew right through the 200-day moving average and big Q4 breakout spot at near $267.
So, what now?
Shares are finding their footing at the 20-day moving average, but given the significant levels it just went through, I wouldn’t put much faith in this mark. That said, the S&P 500 has a better support setup after the selloff.
From here, let’s see how either the S&P 500 trades or see if we can get DIA on a deeper decline. A drop down toward $245 fills one of the May gaps and gets it close to a test of the 50-day moving average. Below that, and we could get a test of the 50% retracement and fill the last remaining gap from May.
Top Stock Trades for Tomorrow No. 2: Snap (SNAP)
Snap (NYSE:SNAP) was on a tear. But like the rest of the market, it came under pressure on Thursday.
It’s hard to get too bullish or bearish after one day of action. A pullback to $20 and the most recent breakout spot would ordinarily be a buy to me. For aggressive bulls, it still can be.
But I’d rather wait and see what kind of dip this materializes into. If we get more selling pressure in Snap, we could see the 20-day moving average and the big breakout level near $18. I would love to buy near the latter.
On the upside, see if Snap can clear the June highs to unlock more upside.
Top Stock Trades for Tomorrow No. 3: Adobe (ADBE)
Why does it seem like Adobe Systems (NASDAQ:ADBE) always reports earnings at the most tumultuous times? The company will again do so tonight.
I’d love for a shallow dip that holds the $380 mark, or seeing if ADBE can at least hold this mark by the close of trading on Friday. There it finds the recent breakout level, as well as the 20-day moving average and uptrend support (blue line).
Below puts the 78.6% retracement near $360 in play, as well as the 50-day moving average. While I’d prefer to see the breakout level hold as support on a retest, a dip to the 50-day wouldn’t be unhealthy.
On the upside, let’s see if ADBE can reclaim $400 and take out the highs near $410.
Top Stock Trades for Tomorrow No. 4: Hexo (HEXO)
Shares of Hexo (NYSE:HEXO) initially opened higher by 17% on Thursday following the company’s earnings report. However, the stock could not maintain its gains on such a volatile day, falling more than 6%.
Leading up to the report, the stock rallied up to $1.25 resistance, failing to reclaim this mark ahead of the print. Now being rejected from this area, it would be encouraging to see Hexo hold $1.
I’m not inclined to trade this penny stock, but if I were, I’d wait for one of two things. Either a breakout over $1.25 resistance or a pullback to the backside of downtrend resistance and the 20-day moving average.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, he did not hold a position in any of the aforementioned securities.