After a sudden late-session selloff on Tuesday, more selling pressure hit stocks on Wednesday. With that in mind, let’s look at a few top stock trades — starting with the overall market.
Top Stock Trades for Tomorrow No 1: S&P 500 ETF (SPY)
The SPDR S&P 500 ETF (NYSEARCA:SPY) has quickly put investors back on their toes. Now, a couple of observations must be made.
First, the index rallied about 35% from the March low to the recent high. As a result, we can expect some unwind here. It doesn’t mean we’re going to new lows (although, it’s possible), but a pullback isn’t the end of the world. Second, the index is faltering just below key resistance.
It failed to push through the April high near 2,955, which would have put the 200-day moving average and the 3,000 level in play (around $300 on the SPY).
The SPY is making a decisive move below the 20-day moving average on Wednesday, as well as short-term uptrend support. Now, last week’s lows become very important, at $279.13. Below opens it up to a weekly rotation lower.
Below the 50% retracement puts the 50-day moving average in play. Which in all honesty, would be a reasonable pullback target after such a lofty run. On the upside, though, bulls need the SPY to reclaim the 20-day moving average — putting the 61.8% retracement back in play.
Top Stock Trades for Tomorrow No. 2: Apple (AAPL)
As goes Apple (NASDAQ:AAPL), so goes the market. It’s not the only stock that matters, but it certainly plays a big role. This stock has been a tank these past few weeks, nearly surging back to its prior highs.
After nearly tagging $320 on Tuesday, shares are retreating. So far, the $305 level is playing a role of support. Should Apple lose this notable level and fall below $300, a retest of the 20-day moving average is likely in the cards. Below that, and $285 may be in play.
Keep in mind, Apple rallied about 50%, or more than $100 per share from the lows. It needs to digest a bit, whether that comes through time or price is still unknown. Below $285 puts the 50-day moving average on the table.
If $305 holds as support, see if AAPL retests $320.
Top Stock Trades for Tomorrow No. 3: Wells Fargo (WFC)
Not much needs to be said of Wells Fargo (NYSE:WFC). This chart looks downright dreadful, and it’s no surprise really.
The banks have been painfully weak and the weakest of the bunch has been WFC. This one is a no-touch on the long side for me, as the only momentum it has is to the downside.
Bears likely feel comfortable being short this name against $24, the level of floor support that just gave way. Should Wells Fargo recover this area, however, then it’s a different question. But for now, shorts are in control.
Top Trades for Tomorrow No. 4: Spirit Airlines (SAVE)
The airlines have been looking vulnerable once again after a rather disappointing bounce from the March lows. Now, Spirit Airlines (NYSE:SAVE) is threatening to decline back to those lows.
Earlier this month, SAVE stock broke below uptrend support and now it’s breaking below the key $10 level. With the stock’s 13% decline on Wednesday, the 2020 lows near $7.50 look like a magnet.
On the upside, though, see if shares can reclaim $10. Back above this mark, and the 20-day and 50-day moving averages become the next obstacles.
Top Trades for Tomorrow No. 5: Clovis (CLVS)
Clovis Oncology (NASDAQ:CLVS) was looking like it was ready to put in a big-time breakout on Tuesday. However, the market selloff put an end to that potential run.
It tried to go monthly-up by clearing the April highs. However, shares reversed lower and now continue hovering below $10. But at least the roadmap is clear.
Over $10 puts the May high back in play with $11-plus possible on a stronger move. Below $8.75 puts the 20-day moving average on the table near $8.33. Below that, and $7 is possible.