After some overnight futures drama regarding the trade deal between the U.S. and China, equities rallied hard. However, breadth wasn’t all that great. That said, let’s look at a few top stock trades for Wednesday.
Top Stock Trades for Tomorrow No. 1: Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) spent the last month consolidating its gains in a sideways manner. And after such a robust rally from the March lows, this is about the best case scenario bulls could have hoped for.
Shares are now breaking out over recent resistance at $370, although the move has been slow thus far. Should NVDA continue higher, look to see if the stock can get to the 161.8% extension, which comes into play up at $399.
Bulls will also be targeting the $400 level, a nice round number.
On the downside, however, look for a break of the $370 level. If this former resistance level doesn’t act as support, a drop to the 20-day moving average may be in play, followed by the $340 to $350 area.
Top Stock Trades for Tomorrow No. 2: Disney (DIS)
Disney (NYSE:DIS) has plans to start reopening its parks in France and Japan, along with a likely return to the MLB season. However, rising numbers of the novel coronavirus may not bode well for Disney shares.
The stock is trading above its 50-day moving average, but below its 20-day. Furthermore, downtrend resistance continues to pressure shares lower in the short term (blue line).
A move over downtrend resistance and the 20-day puts the 200-day moving average in play. A break of $110, though, puts $100 back on the table.
Top Stock Trades for Tomorrow No. 3: General Electric (GE)
General Electric (NYSE:GE) isn’t too different from Disney, at least when looking at the last few weeks of action.
Caught between the 20-day moving average and the 50-day moving average, GE stock is also trapped below downtrend resistance. Unfortunately, it’s also below the 23.6% retracement.
A move below $7 puts the 50-day moving average in play. Below that, and $6 is possible. On a rally, however, look to see if GE can clear the 20-day moving average. Above it puts the $8 to $8.50 area on the table.
Above that zone, and technically the 200-day moving average is possible.
Top Stock Trades for Tomorrow No. 4: American Airlines (AAL)
American Airlines (NASDAQ:AAL) has been very volatile. That’s true over the last few days, but really, it’s been the case all month.
A few weeks ago, AAL stock erupted over the $12.50 level, rallying more than 40% in a single session. Shares ultimately ran to the 200-day moving average, topping out at this mark as failed to continue higher.
Since then, the stock has put in a series of lower highs and on Tuesday, gapped below the 20-day moving average.
From here, the setup is simple. I either want to see a further correction down to $12.50 and the 50-day moving average, or I need to see a breakout over the 20-day moving average and downtrend resistance. Clearing the 38.2% retracement at $16.86 would be a positive, too.
A break below support puts more downside in play, while clearing overhead resistance could put the 50% retracement back on the table near $19.50.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long NVDA and DIS.