4 Top Stock Trades for Wednesday: CHWY, DKNG, RCL, RH

Stock Market

Stocks continue to creep higher, as investors delve through a growing list of news items and potential headwinds. Let’s look at a few top stock trades for Wednesday.

Top Stock Trades for Tomorrow No. 1: Chewy (CHWY)

Chewy (NYSE:CHWY) is keeping the e-commerce theme alive and well.

After rallying up to the $45 to $46 area in April and dipping, shares have been trading in a sideways consolidation pattern. However, former resistance at $38 held as support, as did the 50-day moving average.

Now we’re seeing a move through $36, a clear breakout for the stock. Shares now look earmarked for $50 and possibly higher.

The first extension — the 123.6% — comes in to play just below $54.

Top Stock Trades for Tomorrow No. 2: DraftKings (DKNG)

DraftKings (NASDAQ:DKNG) has been a beast, as evidenced by how well it has traded lately.

That said, shares are beginning to look a bit extended, with Tuesday’s gap-up and reversal looking like a potential point of short-term exhaustion. On a dip below $40, first see if the 78.6% retracement comes into play, near $37.50. It may also put the 10-day moving average in play, which has been support for a while now.

If it holds again, DKNG can potentially retest its highs.

On a further dip, though, see if DraftKings stock test down into the 61.8% retracement and the 20-day moving average.

Top Stock Trades for Tomorrow No. 3: Royal Caribbean (RCL)

Royal Caribbean (NYSE:RCL) is hitting its highest price since early March. Shares are now up 150% from the lows, showing just how strong of a bounce — and how deep of a decline — RCL stock experienced.

From here, one more push higher could get us the gap-fill up toward $63 and a test of the 38.2% retracement. If shares really heat up from there, then $75 to $80 is possible. The latter level was resistance in February and March, while the 50% retracement comes into play at $76.62.

On the dip, however, bulls want to see the $46 to $50 area act as support. There RCL finds its 20-day moving average, the 23.6% retracement and former resistance currently acting as support.

Top Stock Trades for Tomorrow No. 4: RH Inc. (RH)

Formerly known as Restoration Hardware, RH (NYSE:RH) is bursting higher on Tuesday. Shares ended the day up nearly 17%, following an impressive business update.

Shares have been trading with incredible resilience the past few weeks, with Tuesday’s rally being the cherry on top. With RH in an overbought state though, there are questions about how much upside could be left.

A move back below $210 would be concerning in regards to short-term momentum. It would put $200 in play, followed by its major moving averages just below.

A close over this $240 area puts its highs near $256 in play, with $300 being the next possible upside target. Incidentally, the 123.6% extension comes into play at $299.50.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.

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