It might have been a nice three-day weekend, but that came to an abrupt end with Tuesday’s trading session, which was anything but easy. With that in mind, let’s look at a few top stock trades for this shortened trading week.
Top Stock Trades for Tomorrow No. 1: Ark Innovation Fund (ARKK)
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The Ark Innovation Fund (NYSEARCA:ARKK) is a focus for many investors at the moment. It acts as the proxy for growth stocks and as such, it’s been under tremendous pressure.
Can I see a scenario where we test into the $70 to $75 area? Of course. There is plenty of potential support in this area, including the 161.8% downside extension and the 200-week and 50-month moving averages.
However, this morning I had my eye on a different level: $77.53. That was last week’s low and when ARKK dipped below it, it gave us a pretty good trading opportunity on a risk/reward basis.
Unfortunately, though, it proved to only be a day trade, as bulls couldn’t maintain control. From here, keep $77.53 on your radar.
Above that level keeps this week’s high in play near $80.50.
Top Stock Trades for Tomorrow No. 2: Activision Blizzard (ATVI)
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Activision Blizzard (NASDAQ:ATVI) shares erupted higher on Tuesday on news that Microsoft (NASDAQ:MSFT) would buy the firm.
Some investors are wondering if more upside could be in store given that, even at Tuesday’s highs, Activision stock was still down more than 17% from its 52-week high.
On the downside, I really want to see this stock hold today’s low. Not only is it the post-acquisition low, but it’s also where the fourth-quarter high and the 200-day moving average come into play.
Below that, and we have to worry about a test of the $77 level.
On the upside, however, bulls are looking for a move over $87.75 to unlock more upside. To be fair, though, keep in mind that trading mergers and acquisitions (M&A) stocks is difficult, erratic and headline-driven. It’s not my cup of tea.
Top Stock Trades for Tomorrow No. 3: AMC Entertainment (AMC)
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I have warned about AMC Entertainment (NYSE:AMC) so many times now it’s not even funny. The charts have been working against it for a while now and then fundamentals never supported such a crazy short squeeze.
AMC stock has already come down into the $20 level, which was a notable level about one year ago.
It’s failing as support now, unlike last week where it provided a small bounce.
From here, keep an eye on the 200-day and 50-week moving averages. It feels like a magnet to me. Back over $20.36, and aggressive longs can try to trade this back to some of the short-term declining moving averages. But that’s for aggressive buyers only.
Top Trades for Tomorrow No. 4: Bank of America (BAC)
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Bank of America (NYSE:BAC) is due to report earnings Wednesday morning. Down in each of the last four trading sessions, the prior bank reports have weighed on this name.
It’s down into key support now, so a bounce would be appreciated by the longs — although that doesn’t mean it’s going to happen.
If it does, let’s see if BofA can clear the two-day high and 10-day moving average, filling that gap up near $48.70. Above that puts the high near $50 in play, and while it seems unlikely, a breakout to new highs opens the door to the two-times range extension.
On the downside, however, see how BAC stock handles the $42.70 area. It’s actually an interesting level. It’s the December low, a support zone and the 200-day moving average. That could be a buying opportunity depending on how the stock reacts to it.
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 InvestorPlace.com Publishing Guidelines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
