Trading Plan: 13 January 2022
Nasdaq made a small advance (+0.23%) but is still struggling to reach the SMA50. New lows outpaced new highs (75 new highs vs. 85 new lows) so this might a divergence. Growth stocks are also trying to revers but the results were mixed.
SP-500 also advanced a bit (+0.28%) mostly due to Energy and Financial Stocks. The doji candle is also above the EMA21 which is good. But is still a doji, traders and investors were indecisive.
U.S. inflation hit its fastest pace in nearly four decades last year as pandemic-related supply and demand imbalances, along with stimulus intended to shore up the economy, pushed prices up at a 7% annual rate = the consumer-price-index (CPI) measures how much Americans pay for goods and services.
U.S. natural gas futures soared 14% in trading today. The price surge comes as colder temperatures seize hold of the eastern third of the U.S.
Based on the magnitude of monetary tightening (QE ending, rate hikes and possibility of QT) and of some very rich stocks valuations short term is still uncertain.
Sectors
Best yesterday sector: Basic Materials, then Energy. Worst sector: Healthcare.
Best weekly sector: Energy, then Financial. Worst sector: Utilities.
Best monthly sector: Energy, then Basic Materials. Worst sector: Technology.
Sentiment
NAAIM (neutral between 70 and 90): 89.54
VIX (neutral under 20): 17.62
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.83
CNN Fear & Greed: 64 (Greed)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 46.35%
Stocks above SMA200 (neutral above 30): 42.66%
Number of stocks that increased yesterday with more than 4%: 187
Number of stocks that decreased yesterday with more than 4%: 248
Noteworthy Earnings Reports for today
Delta ($DAL) earnings estimate: $0.12 per share
Taiwan Semiconductor Manufacturing ($TSM) earnings estimate: $1.12 per share
What to trade today
$BTU had a beautiful breakout (+10.86)% on yesterday (from this Monday list) and $AMR advanced by 7.28%. Good action in the oil stocks ($DVN and $CVX) and constructive consolidation for $LCID, $VRTX.
You may watch already presented stocks, but not triggered yet: $QCOM, $MLI, $WD.
Semiconductors look good and I will watch $MU, $NVDA and $KLAC. If volumes came, here are some ideas:
Micron ($MU): the dip was immediately bought, low volumes and quiet ATR. Stock respects the EMA21. A possible entry is above the black line with Stop Loss at the EMA21.
Nvidia ($NVDA) it might pass the black line, but also it might retrace and test again the support at $256 area. Entry ~$290 above a previous high and Stop Loss in the $270 area.
KLA Corporation ($KLAC) mostly the same, low volumes, ATR is declining, price here above the EMA10. It held very well during the last weeks showing a good relative strength. Entry at ATH (all time high) with Stop Loss at EMA21.
Merchants Bancorp ($MBIN) shows a beautiful cup and handle with volatility contraction. Low volumes, ATR at the lows. Entry at the black line with Stop Loss at EMA21.
On the short side, Moderna ($MRNA) remains a good candidate. Short sell under the black line with Stop Loss at EMA21. Here is the updated graph:
Please do your own due diligence if or when placing a trade. All ideas stated here are my own action plan and do not represent trading or investment advice.