Stock Market

Tech and crypto could dominate as the hot stocks for tomorrow. We’re still seeing the Federal Reserve and earnings control the headlines now.

That’s as investors continue to fret about rate hikes from the Fed and a potential recession at some point this year. It’s also as the S&P 500 continues to “climb a wall of worry,” pushing higher amid these concerns.

We’re also in the middle of earnings season. That’s controlling the headlines today, with Disney (NYSE:DIS) and its restructuring efforts atop the list.

Let’s look at the potential hot stocks for tomorrow — Friday.

Hot Stocks for Tomorrow: PayPal (PYPL)

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Source: Chart courtesy of TrendSpider

Near the lows, I felt that PayPal (NASDAQ:PYPL) was getting a raw deal. The company has clearly had its ups and downs, but it runs a solid business. Perhaps it was being lumped in unfairly with unprofitable tech stocks. Maybe it was due to its business in crypto.

Either way, this stock paid a heavy price, suffering a peak-to-trough decline of 78.6%, with that low not materializing until Dec. 22.

In two straight quarters, the company raised its earnings outlook and while it has enjoyed short-term rallies, the stock has still largely struggled to regain traction. Bulls’ hope is that it can do so after reporting fourth-quarter earnings on Thursday after the close.

Investors are looking to turn the page and focus on 2023, a year that’s expected to generate positive earnings and revenue growth.

The Chart: The upper-$60s has been support, although I don’t expect PYPL to see this zone, given how favorably the market has been treating earnings this quarter. More realistically, support should come into play between $75 and $77.50, where shares find the 50% and 61.8% retracements sandwiching the 50-day moving average.

On the upside, bulls want to see PayPal regain $82 to $83, which is the Covid-19 low and the 200-day moving average. Above that puts the recent gap-fill in play at $85.20, followed by $88 to $89. Above $90 and we could see the fourth-quarter high of $95.57.

Lyft (LYFT)

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Source: Chart courtesy of TrendSpider

The travel industry is clearly booming. Investors heard great things from Uber (NYSE:UBER) and Royal Caribbean (NYSE:RCL) earlier this week. The airlines reported strong demand last month, while Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) both reported solid results as well.

That all leads to higher expectations for Lyft (NASDAQ:LYFT), which are undoubtedly on the rise with this information in hand.

From the Dec. 28 low to this week’s high, shares have climbed 90%. That said, we’ve seen a 10% pullback in the last two days. Will that be enough to allow for a post-earnings pop?

The Chart: Holding the fourth-quarter high now, the earnings reaction will be interesting. On the upside, I want to see if Lyft can take out this week’s high at $18.36. Above that puts $20-plus in play — if shares can break out over downtrend resistance. On the downside, see if $15 and the 200-day moving average are support. Below could put the 50-day in play.

Hot Stocks for Tomorrow: Bitcoin (BTC-USD)

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Source: Chart courtesy of TrendSpider

Last but certainly not least is crypto and more specifically, Bitcoin (BTC-USD). The cryptocurrency industry will be in focus when Federal Reserve Bank of Philadelphia President Patrick Harker speaks at a cryptocurrency conference on Friday.

Harker’s speech is due up at 1 p.m. Pacific at the Digital Money, Decentralized Finance, and the Puzzle of Crypto event in La Jolla, California.

We don’t know that Harker will necessarily say or imply anything that gives the space much direction, but his opinion on governance and acceptance will be interesting nonetheless.

Investors likely aren’t looking for a euphoric reaction to Bitcoin, nor a catastrophic reaction. However, Harker’s comments and the conference as a whole could give the price a nudge.

The Chart: Bitcoin has been weakening lately and recently lost its 10-day and 21-day moving averages. If the selling persists, see if it can firm up around the fourth-quarter high. Below that could put the 50-day and 200-day moving averages in play near $20,000.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.