The stock market has seemingly found its footing, as it continues to push to the upside despite the banking crisis in the U.S. and across the pond in Europe. This apparent “all-clear” sign from the market has investors looking at the hot stocks for tomorrow.
But not so fast!
While we seem to be past the banking crisis, these things can take time to play out. Credit Suisse (NYSE:CS) is now being taken over by UBS Group (NYSE:UBS), while the U.S. is still sorting through several regional bank failures.
This isn’t 2008 again, but that doesn’t mean we’ve seen the last of these issues. Not to mention, the Federal Reserve just announced a 25 basis point hike at its latest meeting.
With all of that in mind, let’s look at the hot stocks for tomorrow — Thursday.
Hot Stocks for Tomorrow: Chewy (CHWY)
The pet industry is a growing industry, not just here in the U.S. but worldwide. Yet, Chewy (NYSE:CHWY) stock has struggled for upside traction. Many have called it the “Amazon (NASDAQ:AMZN) of pets,” and that’s not far from the truth.
However, it also has to contend with Amazon and other online retailers, not to mention a formidable brick-and-mortar industry. Further, Amazon can lean on its consumer business, as well as its massive Web Services business, whereas Chewy cannot.
While the stock more than doubled off the 2022 low, Chewy stock has been back under pressure in recent trading. Shares are down about 27% from the February high. Bulls are hopeful that it’s just some consolidation after shares rallied almost 140% from the 52-week low. We’ll get a better sense of sentiment after the company reports on Wednesday after the close.
The Chart: Chewy stock is doing a good job holding the $34 to $37 area. However, bulls need it to regain the 10-week and 21-week moving averages. Above that could eventually open the door back up toward $50. On the downside, last week’s low near $36 is key. Below that and $34 is back in play, followed by a potential fall to $30.
Hot Stocks for Tomorrow: KB Home (KBH)
Everyone thought the housing market was going to get crushed by the Federal Reserve. While the Fed has rapidly raised interest rates over the last several quarters — and thus mortgage rates have climbed significantly too — we haven’t seen the housing market get crushed.
Sure, it hasn’t been as smooth sailing as it was in 2021 when homebuilders and sellers couldn’t get enough houses on the market fast enough, but it’s hardly been the repeat of 2008 like many doomsayers were calling for.
That brings our attention back to KB Home (NYSE:KBH), which will report earnings on Wednesday evening.
Investors will be listening closely to the conference call, looking for any meaningful clues from CEO Jeffrey Mezger. He’s been in the industry for 40 years and has served as president and CEO of KB home since 2006.
The Chart: As it relates to KBH stock, shares have undergone a massive rally from the September low, climbing more than 60%. Now pushing higher following a recent pullback, investors want to know what’s next.
Specifically, I’m watching the $40 to $42 area. This marks the prior 2023 high, as well as the 61.8% retracement of the larger range. Above that puts $46.50 in play. On the downside, the $34 area is key. That’s followed by the 50-week moving average and the $31 level.
Fed and the Invesco QQQ Trust Series (QQQ)
The Invesco QQQ Trust Series ETF (NASDAQ:QQQ) has been the relative strength leader lately, and that’s no surprise. Large-cap tech stocks like Tesla (NASDAQ:TSLA) and Nvidia (NASDAQ:NVDA) have soared year to date. Further, the “safety trade” away from banks has been into balance sheet behemoths like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG).
As a result, the Nasdaq has easily outperformed its index peers so far this year, and thus, the QQQ has soared as well. So far on the year, the exchange-traded fund (ETF) is up 17%, even though it’s still down 10% over the last 12 months.
Never mind any of that though, as the Fed will dictate its next direction.
If the Fed comes out overly hawkish, tech stocks are likely to pay the price. However, if there is a hint of being accommodative (without causing a panic with too much accommodation), then tech may very well continue its rally.
The Chart: The weekly chart for the QQQ doesn’t look all that bad to me. In fact, it looks quite good — save for the fact that the Fed is a somewhat binary situation for the stock market.
For the QQQ, it had a notable correction down to the 61.8% retracement (from the all-time high down to the Covid-19 low). It put in a higher low, broke out over downtrend resistance (blue line), cleared resistance near $290, then found this prior resistance level to be current support. Now it’s pressing the year-to-date high and potentially looking for more.
If the QQQ can clear $313.68 and stay above this mark, it could very well open the door up toward the $330 to $332 zone.
On the flip side, if it can’t hold $300 on the downside, then the $288 to $290 zone is back in play.
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.