After a tough start to the new year on Monday, stocks rebounded on Tuesday. That didn’t fully make up for the losses, but it helped. That said, let’s look at a few top stock trades as we approach midweek.
Top Stock Trades for Tomorrow No. 1: Square (SQ)
I recently examined Square (NYSE:SQ) stock as shares were in the midst of a four-day fall and breaking support. I said ideally we could get a washout down to the $195 to $200 level.
However, sometimes our ideals don’t play out. I said that if bulls regained control, look for the stock to reclaim $220 and the 10-day moving average.
It has done just that as it now rotates over Monday’s high. If shares continue higher, first look to last week’s high as a potential target near $233. Above that puts $240-plus in play.
On the downside, though, let’s see if the $214 level can continue to hold as support.
Top Stock Trades for Tomorrow No. 2: Bed Bath & Beyond (BBBY)
Bed Bath & Beyond (NASDAQ:BBBY) had a nice day, up about 10% on Tuesday. The stock is scheduled to report earnings on Thursday. It’s also one of my top stock picks for the year, so let’s hope it gets started off on the right foot.
Shares surged higher in October, topping out near $26 before undergoing a multi-month consolidation phase.
If the stock can continue higher, I want to see it reclaim the 50-day moving average and challenge the December high at $21.55. That’s followed by the November high at $22.80, the gap from October near $24 and finally, the 52-week high at $26.16.
That last mark came within pennies of the 161.8% extension, while the two-times range extension comes into play at $31.36.
On the downside, however, losing the pre-coronavirus 2020 high at $17.39 and the 100-day moving average would be disappointing for the bull case. It could also put a gap-fill in play near $15.
Top Stock Trades for Tomorrow No. 3: Workhorse (WKHS)
Workhorse (NASDAQ:WKHS) spent most of December chopping sideways near a bevy of moving averages. For now, bulls are regaining some momentum.
Rallying off several moving averages now, investors will want to see shares hold above the recent low at $19.72.
On the upside, bulls need to see shares rotate over $25.54, the Dec. 24 high. Incidentally, that is roughly the gap-fill mark from Dec. 1.
Above that area, and perhaps WKHS stock can work up enough strength for a move up toward the $29 to $30 area.
Top Trades for Tomorrow No. 4: Exxon Mobil (XOM)
Energy was the worst-performing sector in 2020, but Exxon Mobil (NYSE:XOM) is trying to start off on the right foot this year.
Shares rose about 0.7% on Monday when the overall markets fell. Today, the stock ended Tuesday up 4.8%.
Exxon is trying to rotate over the December and August highs. Those are multi-month highs if you were unaware, as this stock has really lagged the overall market.
If it can rotate up, it could put $48.50 in play, filling the gap from June. Above that and the June high at $53 may be in the cards.
If Exxon Mobil can’t rotate higher, see that the 10-day and 21-day moving averages act as support.
Top Trades for Tomorrow No. 5: Netflix (NFLX)
Netflix (NASDAQ:NFLX) continues to give investors a mixed bag, full of promises and false starts.
On Thursday — the last trading day of 2020 — Netflix made a nice move north of $540 and looked like it was ready to get going. The next session, it fell flat and it did so again on Tuesday with a bearish analyst note offsetting positive streaming news.
So, now what?
We have shares sitting right at that pivotal $520 point, the November high. It’s also caught between its 10-day and 21-day moving averages.
If Netflix loses this week’s low at $515.09, then short-term bulls might cut NFLX stock and look for a dip to the 50-day moving average.
If it holds, I want to see if Netflix can rotate higher and retest $540, a level it failed at on Monday. Above puts a weekly-up rotate over $545.50 in play, which could put the $550 to $555 zone on the table.
Ultimately, bulls are looking for Netflix to retest $575 and eventually $600-plus.
On the date of publication, Bret Kenwell held a long position in BBBY and NFLX.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
