The stock market was dealt quite the curveball with a late-day selloff on Wednesday. So far on Thursday, though, the stock market is powering higher. That has investors looking at the hot stocks for tomorrow.
Wednesday was a tough session for investors. First, the Federal Reserve raised interest rates by 25 basis points. That was widely the expectation, according to the market. However, the press conference was the wild card.
As Chairman Jerome Powell continued to speak, the market was unsure of what to make of the commentary. It didn’t help that headlines from Treasury Secretary Janet Yellen were also hitting the tape.
With that, let’s look at a few of the hot stocks for tomorrow — Friday.
Hot Stocks for Tomorrow: Regional Banking ETF (KRE)
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A big part of yesterday’s late-day selloff had to do with Yellen’s comments, not the Fed’s, even though the latter was a bit more hawkish than many investors likely expected given the banking crisis. However, Yellen’s comments that the government “is not considering insuring all uninsured bank deposits” seemed to have spooked investors.
While the overall market is trading well on Thursday — and in particular, the Nasdaq — bank stocks are not doing that well. Specifically, the SPDR S&P Regional Banking ETF (NYSEARCA:KRE) is down on the day.
As we look at the KRE ETF, it’s taking out the last seven days’ worth of lows. While it’s down just 1% so far on the day, it’s only about $2.50 a share above the 52-week low at $41.92.
It doesn’t help that First Republic (NYSE:FRC) is teetering on making new lows too and is down about 7.5% so far on the day. Worries over this group persist, regardless of what the indices suggest.
The Chart: The KRE ETF is leaning on the 200-month moving average and bulls need to see it hold the 52-week low. A further break could put $40 in play, followed by $38.25. On the upside, the KRE ETF needs to regain $46 to have a sustainable bounce.
Hot Stocks for Tomorrow: Block (SQ)
Up massively from the lows, Block (NYSE:SQ) was consolidating its gains quite nicely until Thursday. Shares were forming a bull flag consolidation pattern, and bulls were looking for it to join in on the tech rally.
However, on Wednesday it had a nasty close. Then, on Thursday before the open, Block bulls were dealt a devastating blow.
After opening lower by 17.4%, Block stock was down 22.2% at one point in the session. The move came after it was reported that well-known short-seller Hindenburg Research was short the stock. The firm noted:
“Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping. The “magic” behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics.”
The Chart: Let’s see if SQ stock can stabilize on Friday and into the weekend. If bulls can gain momentum, it would be encouraging to see Block regain last week’s low of $67.25. That said, the 200-week moving average is just above that mark and needs to be regained for a larger rebound.
On the downside, today’s low at $56.50 is key. Below that could open the door down to the $52s.
Hot Stocks for Tomorrow: Ethereum
Cryptocurrencies have been trading much better lately, and the banking crisis has only seemed to accelerate demand for these assets. Worries about FDIC insurance, bank runs and outright failures have driven investors into these crypto-based assets.
I will be the first one to admit that I’m not the biggest crypto supporter out there, but I only put a main focus on the larger cryptos. More specifically, I like to focus on Ethereum (ETH-USD) and Bitcoin (BTC-USD).
From this month’s low, Ethereum has bounced 33.5% and Bitcoin is up more than 45%. It’s been a strong run for this group, and you know what? If they can continue higher, we may see a larger breakout occur. If the banking issues continue, it will likely push more people into assets like gold, cryptocurrencies and other alternatives.
The Chart: When we zoom out to the monthly chart, you can see the development in Ethereum. It’s regaining the key $1,700 to $1,750 zone and the 10-month moving average. It’s also rotating over the February high. If the momentum continues, $2,000 could be next, followed by $2,400 to $2,500.
On the downside, $1,450 is key support.
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.