Trading Plan: 11 February 2022
After a gap down in the morning, Nasdaq (-2.10%) came back to the highs. Not after a long time, it reversed again du the hawkish Fed comments and closed at the morning gap price. As I wrote in the last Trading Plan about the possible scenarios, the Thursday gap closed the Wednesday gap. New lows equal new highs, 37.
SP-500 (-1.81%) also closed the previous day's gap. The price remains in the known area and we need to focus on the key levels: 4600 and 4450.
In the news
The Consumer Price Index (CPI) for January 2021 rose 0.6%. The CPI comes to 7.5% YoY, the fastest since 1982.
The FED might tighten monetary conditions amidst rising prices more aggressively than expected. The Federal Reserve is debating the expected 0.25% increase or a more aggressive hike.
A bigger hike (0.5%) is looking like the more probable option — at least in the eyes of investors.
10-year Treasury note is above 2% for the first time since August 2019.
Nordson will replace Xilinx Inc in the S&P 500 index before the start of trading on Feb. 15. Xilinx is being acquired by AMD.
Disney+ surpassed Netflix in subscriber growth, according to Disney’s most recent earnings report.
Samsung held an event in the metaverse. And it didn’t quite go to plan as a technical issue prevented some people from accessing the event.
Sectors
Best yesterday sector: Energy, then Basic Materials. Worst sector: Technology.
Best weekly sector: Consumer Cyclical, then Basic Materials. Worst sector: Utilities.
Best monthly sector: Energy, then Basic Materials. Worst sector: Consumer Cyclical.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 66.8
VIX (neutral under 20): 23.91
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.88
CNN Fear & Greed: 37(Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 34.18%
Stocks above SMA200 (neutral above 30): 31.17%
Number of stocks that increased yesterday by more than 4%: 146
Number of stocks that decreased yesterday by more than 4%: 377
Noteworthy Earnings Reports / Events for today
DataDog ($DDOG) traded 11.55 % higher as the cyber security company beat on the top and bottom lines with revenue growing 84% year-over-year. EPS: $0.20 (vs. $0.12 expected), Revenue: $326 million (vs. $291.5 million expected).
Cloudflare ($NET) jumped in extended trading after reporting a profit in Q4 that surpassed expectations and revenue which met expectations. Moreover, $NET’s revenue projection for 2022 was higher than expected. EPS: $0.00 (vs. $0.00 expected), Revenue: $193.6 million (vs. $185 million expected).
Affirm ($AFRM) stock dropped on Thursday after the company reported fiscal second-quarter results ahead of schedule and disappointing guidance.
Today Earnings Reports:
What to trade today
I will watch $NET for a continuation as an EP (episodic pivot) play after good earnings reported after-hours. If gapping up, the entry might be 5-min ORB (opening range breakout) if not too extended. Stop Loss: low of the day. Generally, an earnings gap might start a new trend.
Adjust the Stop Loss for all the triggered stocks, especially the ones with big advances. Do not forget to sell partials on the way up, otherwise, you might sell on the way down.
Stocks from the previous trading plans that are still in the game: $CRWD, $DOCN, $MNDY, $MRAM, $PATH, $SE, $TASK, $UPST.
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.