Investors may have gotten to enjoy a long weekend away from the stock market, but that joy didn’t last long. Due to political worries in Italy, U.S. stocks took it on the chin Tuesday. There were some strong performers, but by and large stocks declined. Here are our top stock trades going forward.
Top Stock Trades for Tomorrow #1: S&P 500 (SPY)
With Tuesday’s 1.5% tumble, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) fell out of its recent trading range between $270 and $274.
Just as it was shaping up and looking like it might move higher. Should buyers fail to show up near the 50-day, looking for support near the 200-day moving average. It would require a further drop in the SPY, but the results would be far from catastrophic.
Top Stock Trades for Tomorrow #2: Nasdaq (QQQ)
While the SPY may be struggling, tech is doing better, with the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) only down about 50 basis points.
It’s always possible for the QQQ to catch up to the SPY’s losses. But the early look here is that tech could be a safe-haven. After all, Apple Inc. (NASDAQ:AAPL), Nvidia Corporation (NASDAQ:NVDA), Netflix, Inc. (NASDAQ:NFLX) and Amazon.com, Inc. (NASDAQ:AMZN) have been holding up fine.
Continued selling likely changes that, but for now, it looks okay. And unlike the SPY, the QQQ didn’t break below its recent trading range. Look for support in that $166 area to hold. If it doesn’t, there should be plenty of support areas before the 200-day moving average comes into play.
Top Stock Trades for Tomorrow #3: Bank of America (BAC)
One notable laggard group? The banks.
Many bank stocks gave us a false breakout, something that InvestorPlace traders were watching for. Names like JPMorgan Chase & Co (NYSE:JPM) were on the cusp of a breakout, but having failed to do that, a retest of support was back on the table.
Bank of America Corp (NYSE:BAC) is no different.
Support at $29 has held up multiple times in 2018, but with BAC just below that level now, a retest of the 200-day moving average near $28.50 could be possible. I would look for a quick bounce in BAC between $28.50 and current levels.
As such, BAC offers bulls a solid risk/reward near $28.50 to $29.
Top Stock Trades for Tomorrow #4: Momo Inc (MOMO)
Momo Inc (ADR) (NASDAQ:MOMO) is one of the few bright spots Tuesday, rocketing higher by more than 14%. That’s on the back of the company’s earnings and revenue beat.
So where to now?
Unfortunately, MOMO stock is heading right for a brick wall. Should it break through this area of resistance, it should continue running to new highs this year. If it fails, a pullback or some consolidation (or both) will be needed.
Top Stock Trades for Tomorrow #5: Applied Opto (AAOI)
Applied Optoelectronics Inc (NASDAQ:AAOI) is not for the faint of heart and has had its share of controversy over the past year.
That being said, AAOI could be setting up as a potential long candidate for those willing to trade it. Shares are flirting with that $36 resistance level, but a push through could ignite a big-time rally.
There is a massive — and I mean seriously large — short position in AAOI. While that would make me scrutinize the fundamentals quite a bit, it could also fan the flames of a rally if shorts are forced to cover. Over $36 could be what sparks a big short-covering rally too.