Trading Plan: 1 February 2022
Trading Plan: 1 February 2022
A very strong comeback yesterday in Nasdaq (+3.41%), but not a really Follow Through Day. This seems more likely as a short-time euphoria probably due to the short-covering rally and Apple's good momentum. We might see an EMA 21 or even SMA200 cross, but without real volumes, I am skeptical, the damage is not repaired yet.
SP-500 gained 1.89% yesterday and closed above the SMA200. If the volumes do not come in, it is possible to see another leg down and the price might form a double/triple bottom here. We will watch closely to see how the reaction will be at SMA50.
Growth stocks were the kings on Monday. They took a mouthful of air and reverse powerfully when the market give them the chance. You may read the article I wrote yesterday about their condition. It is a very good time for investors to scale in and build a growth portfolio in the following weeks.
Good reversals: $NET +15.82%, $UPST +15.74%, $AMPL +13.51%, BILL 13.01%, MNDY +11.42%, S +9.84%, SNOW +8.75%, ZS +7.75%, CRWD +6.95%, DDOG +6.24%.
The omicron subvariant is more contagious, but vaccinated people are less likely to spread it. Denmark becomes the first EU country to scrap all COVID-19 restrictions.
Tesla climbs more than 10% on Monday after Credit Suisse upgrade.
NXP Semiconductor reported earnings and beat analyst estimates. The company also authorized a $2 billion share repurchase program.
Sony, the company behind the world’s most popular gaming console, is buying Bungie, a former Microsoft subsidiary, for $3.6 billion.
Sectors
Best yesterday sector: Consumer Cyclical, then Technology. Worst sector: Energy.
Best weekly sector: Energy, then Technology. Worst sector: Industrials.
Best monthly sector: Energy, then Financial. Worst sector: Technology.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 53.39
VIX (neutral under 20): 24.83
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.06
CNN Fear & Greed: 38 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 25.89%
Stocks above SMA200 (neutral above 30): 28.98%
Number of stocks that increased yesterday by more than 4%: 1071
Number of stocks that decreased yesterday by more than 4%: 31
Noteworthy Earnings Reports / Events for today
Google parent Alphabet will report its fourth-quarter results after the Feb. 1 close. UBS analyst Lloyd Walmsley is also expecting strong Q4 results from GOOGL. Walmsley points to the research firm’s fourth-quarter ad checks, which suggest Google was a prime beneficiary of the reallocation of social media budgets. As for Alphabet’s upcoming report, analysts, on average, are looking for a 26.8% year-over-year (YoY) spike in revenues. This will fuel a 22.5% jump in earnings per share (EPS) to $27.32.
PayPal will report its fourth-quarter earnings after Tuesday’s close.
Other earnings reports:
What to trade today
Beautiful trades from yesterday's list: $DDOG, $CRWD, $HOOD, $MA + the ones from the watchlist $ZS, $AFRM, $S or $PRFT. $DE not triggered yet, good to put on the watchlist. If taken, I suggest tracking them closely and adjusting the Stop Loss tighter than normal.
Dutch Bros ($BROS): I like the wide range bar ignited from the EMA21 and now it forms a good-looking cup and handle pattern. Entry above yesterday high and Stop Loss under yesterday low.
Hut 8 Mining ($HUT) is a crypto-related stock. It is possible to see it breaking the downtrend line. If this happens and volumes come in, the trade looks good. Stop Loss max. 7%.
Pioneer Natural Rescs ($PXD) is an Energy Play with a lot of accumulations during the last weeks. Entry in the highs and Stop Loss at yesterday low.
Do your due diligence if or when placing a trade. All ideas stated here are my own and do not represent trading or investment advice.