After a strong day in the markets, stocks turned in a more muted session on Tuesday. Now, let’s see how the rest of the week shakes out while we look at a few top stock trades.
By the way, did you see Rocket Companies (NYSE:RKT) today? I outlined that one yesterday, but wasn’t looking for $42-plus by any stretch — at least, not in a day!
Top Stock Trades for Tomorrow No. 1: Lemonade (LMND)
I liked Lemonade (NYSE:LMND) around $50 when it gave us a nice dip. But north of $150 and around $180, it just didn’t make any sense. Anyone who reads this column even semi-regularly knows I’m not a big short seller, but LMND stock was a short in that range.
The valuation was bananas even if the company had the growth rates to justify it — which it didn’t. Breaking to multi-month lows and LMND stock is getting what it deserves (and I mean that without spite. It’s simply overvalued).
$137.30 failed as support, as did the 50-day moving average. Perhaps the 100-day moving average is support. A slight overshoot puts $100 in play and more broadly speaking, that consolidation zone between $85 and $100.
LMND stock will probably fetch a bid somewhere in that range, and if the market holds up, likely near the higher end. But look for trend resistance to be selling points, not buying points.
Until the larger trend reverses, this is probably one to avoid for now.
Top Stock Trades for Tomorrow No. 2: Target (TGT)
Target’s (NYSE:TGT) initial reaction was bullish to its earnings. Only once the conference call began did investors turn into sellers.
The stock put in its third lower high, as it continues to struggle with the 261.8% extension and downtrend resistance. Worse, the 50-day moving average failed as support.
I’m torn on Target. I really like this one (fundamentally speaking) and it’s been a big winner over the years. That said, the tide seems to be shifting on retailers, particularly those that did well during the pandemic.
Still, it’s hard to be a seller. Shares are bouncing off the 100-day moving average as we speak, as it tests below the January low.
If the stock can reclaim $177, look for a bounce back up to the 50-day moving average. If that scenario plays out, let’s retake Target’s temperature to see how it’s reacting to the 50-day. In short, is it reclaimed or is it resistance?
Should the stock break $169 and close below it, we may need a test of the 200-day moving average.
Top Stock Trades for Tomorrow No. 3: Veeva Systems (VEEV)
Veeva Systems (NYSE:VEEV) was looking great in February. I posted about it here, as shares gave us a multi-week, multi-month breakout over $298-ish.
The move over $300 sent shares rocketing up to $325, but the market-wide correction weighed heavily on the stock.
On the downside, it’s back in the range. On the plus side, it’s holding the 50-day and 100-day moving averages and uptrend support (blue line). A break of these marks likely puts $274 back in play, a level VEEV stock hit twice last week and which attracted major buyers.
A break of this area has the 200-day moving average in play, followed by $255.
A close back over $300 puts $325 in play.
Top Trades for Tomorrow No. 4: Kohl’s (KSS)
Kohl’s (NYSE:KSS) has been a monster over the last few months, ripping from the $20s into the $50s.
I used a weekly chart, but the thicker black lines represent major daily gaps at $57.26 and $62.68, respectively.
With the latest push, shares have filled the first gap (at $57.26). The latter remains unfilled and will be a level bulls push for should Kohl’s stock continue higher. Above that could put the 2019 high and 161.8% extension in play.
Shares look like they’re struggling with this current area. It may only be a short-term consolidation or it may lead to a pullback. We don’t know yet.
If it is a pullback, look for a dip back to the $50 to $52 area. There it has multiple layers of support, including the pre-coronavirus 2020 high, the 200-week moving average and potentially the rising 10-week moving average.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.