Stocks got off to a robust start on Wednesday, before fading lower in afternoon trading. The action is really starting to frustrate investors who thought they’d be enjoying a market-wide rally into year-end. So far that hasn’t been the case and a look at our top stock trades will show where some of the pain has been.
Top Stock Trades for Tomorrow #1: Apple
We can’t ignore Apple (NASDAQ:AAPL) with this type of action, now that shares are down more than 20% from the highs. By definition this puts Apple in bear market territory.
When will the selling end?
It’s hard to say. As worries over iPhone units sales continue to persist in the analyst community, Apple stock is subject to further downgrades. The good news? Business is going quite well and will for the foreseeable future.
Below all three moving averages is not a good sign, but down big from the highs and Apple should soon find support. The $175 to $180 level is significant and that’s provided uptrend support (black lines) don’t play a role. I would nibble some now for a long-term hold.
Top Stock Trades for Tomorrow #2: Snap
The Department of Justice and SEC are investigating Snap (NYSE:SNAP) for its IPO and whether it mislead investors.
I thought the stock would be getting hit harder on the news, but it’s holding up surprisingly well, down “just” 4%. But it leaves shares clinging to the backside of prior downtrend resistance, as well as a support level near $6.40.
Below this and its lows at $6 are on the table. On a rally, it needs to clear its recent highs over $7-and-change.
Top Stock Trades for Tomorrow #3: Cisco Systems
Cisco Systems (NASDAQ:CSCO) will report earnings after the close. Prior to the last week of trading, Cisco was actually looking pretty good, just a hair under its 52-week high.
Then the stock sank almost 10% in just a few days and is now below both the 50-day and 100-day moving averages.
Honestly, I kind of like this price action going into the report. It lowers the bar and is a favor for bulls looking to go long. The post-earnings action is important too though. On a rally, let’s see if we can get back through these major moving averages. On the downside, look for support at the 200-day and uptrend support.
Top Stock Trades for Tomorrow #4: Adobe Systems
Where does Adobe Systems (NASDAQ:ADBE) settle down if this $230 to $235 area gives way?
That’s a great question and one that’s not readily available.
The 50-day and 100-day moving averages are sloping lower and shares are below the 200-day. They are also teetering on that support level in the low-$230 range. About a month ago, Adobe stock sprung from these levels after management guided for a strong finish to 2018 and another impressive year in 2019.
Right now the market doesn’t seem to care as it threatens to send Adobe lower. Do investors buy this right here, right now?
Maybe nibbling a long-term position, but traders should wait for a close over $255. That gets ADBE over several overhead resistance levels and will likely mean the market is in a more bullish state. At the very least, the wind will be at its back.
Top Stock Trades for Tomorrow #5: Natural Gas
I really wanted to cover an index here, but we can get to that on Thursday because the price action in natural gas is too crazy to ignore.
The United States Natural Gas ETF (NYSEARCA:UNG) ripped more than 18% on the day and is now up more than 44% over the past trading sessions. My condolences go out to the short-sellers, who are certainly feeling the pain on this one.
So what now?
UNG becomes a no-touch for me. Yes, I see the near-90 RSI reading (blue circle) and the huge move. But those who shorted UNG on Tuesday at $33 probably though it was overdone too. Those traders are only down 18% in a day. That said, I certainly wouldn’t be buying this and looking for more upside. Let’s just see how it plays out. Just because a stock moves, doesn’t mean we need to play it.