After a wild finish to Friday’s action, Monday was a bit more calm as investors tried to sort out the mess from Archegos Capital. With that in mind, let’s look at a few top stock trades, starting with a cryptocurrency.
Top Stock Trades for Tomorrow No. 1: Ethereum (ETH-USD)
Ethereum (CCC:ETH-USD) prices erupted on Monday, up more than 8%. The crypto isn’t necessarily out of the woods yet, as it hasn’t made a higher high, but it’s looking much better.
Ethereum burst through the 10-day, 21-day and 50-day moving averages with Monday’s rally. From here, I want to see it take out the March high near $1,943. If we get a few more days below that mark, bulls will have the potential for an inside-and-up monthly rotation.
It will be hard not to be long in that scenario — at least for crypto bulls.
Keep an eye on that downtrend resistance mark (blue line). That could keep a lid on the crypto and if it starts to lose momentum, it could put the 10-week moving average back in play.
Top Stock Trades for Tomorrow No. 2: Morgan Stanley (MS)
Morgan Stanley (NYSE:MS) was one of the firms that got sold off on Monday morning due to that Archegos Capital news.
However, so far the stock is holding its 50-day and 10-week moving averages. It’s also holding that $76 level, which was resistance in January and support in late February.
For bulls, Monday’s low now becomes key. Above and a bounce is still in play, potentially up to the gap-fill level near $80 and the 21-day moving average. Above the latter and $85-plus is in play.
On the downside, though, a close below Monday’s low opens the stock up to a possible decline down to its 21-week and 100-day moving averages.
Top Stock Trades for Tomorrow No. 3: Roku (ROKU)
The selling pressure is finally starting to hit Roku (NASDAQ:ROKU). At Friday and Monday’s lows, the stock was down about 40% from the highs — which to me, usually represents a longer term buying opportunity.
Unfortunately in this case, there’s no immediate support nearby, although that may not matter much to fundamental investors. However, it’s clear that Roku is struggling to regain the $316 level, although it’s holding Friday’s low for now.
Should the stock take out those lows, a flush down to the $260 to $265 area could be in play. There the stock finds its 200-day moving average and the gap-fill level from November.
If Roku stock turns higher before that, look for it to reclaim the 10-day moving average. Until it does that, bulls can’t reclaim the trend.
Top Trades for Tomorrow No. 4: DraftKings (DKNG)
DraftKings (NASDAQ:DKNG) has been a leader among growth stocks. However, it can’t escape some of the selling pressure.
While the stock had a nice bounce from the 10-week and 50-day moving averages on Friday, bulls didn’t have the same luck on Monday as the stock knifed right through these two measures.
Now on the decline, let’s see if the $56 level acts as support, along with the 100-day moving average. Below that puts $53 in play, then the 200-day moving average.
On the upside, however, shares need to reclaim the 50-day, then $64. Above that opens the door to the current high, then eventually a push up toward the 161.8% extension.
On the date of publication, Bret Kenwell held a long position in ROKU and DKNG.