Nasdaq (+1.27%) had another up day, but with below-average volumes. Hard to say what’s going to do next, the idea is to assess the move based on the potential scenarios. It is constructive to have the close above both its EMA21 and SMA50, let’s watch the next targets: 123650 area / SMA200. As always, prepare for the bad scenario by keeping an eye on the recent lows (there is no real support until the 11500 area, a ~6% risk if the main averages cannot hold).
SP-500 (+1.06%) made a similar move. Thus, the approach is more or less the same here: watching the 4200 area, SMA200 and 4320 area as well. For the negative scenario, last Tuesday’s low.
In the news
Biden to hit China with broader curbs on U.S. chip and tool exports.
Starbucks to unveil ‘reinvention’ strategy at investor day on Tuesday.
Rivian’s Mercedes partnership an important international win for the EV maker.
Falling gas prices are raising hopes that inflation is slowing.
Traders see inflation falling for the rest of 2022, but that likely won’t end Fed rate hikes or market volatility.
Sectors
Best yesterday sector: Consumer Cyclical, then Technology. Worst sector: Communication Services.
Best weekly sector: Consumer Cyclical, then Basic Materials. Worst sector: Energy.
Best monthly sector: Energy, then Utilities. Worst sector: Technology.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 27.33
VIX (neutral under 20): 23.87
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.05
CNN Fear & Greed: 48 (Neutral)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 52.58
Stocks above SMA200 (neutral above 30): 33.35
Number of stocks that increased yesterday by more than 4%: 363
Number of stocks that decreased yesterday by more than 4%: 102
McClellan Oscillator (neutral between -100 and 100): 85.15
Earnings Reports
Oracle reports 18% revenue growth after the Cerner deal closes.
Noteworthy earnings reports for today:
What to trade today
Today is CPI day. Market was optimistic during the last 4 days, maybe the investors are sure the inflation peak is part of the past?! No forecasts as my idea is as good as yours. We will react based on the market… reaction: a price above yesterday’s high is bullish and of course, the vice-versa, if the price undercut its EMA21 / SMA50, we are likely to see lower prices.
My overall exposure is 26%. Today, I will watch:
Karuna Therapeutics KRTX 0.00%↑ has a high tight flag and might ignite soon. If the price passes the black line, the trade could work. Stop Loss: EMA21.
Beam Therapeutics BEAM 0.00%↑ is setting up nicely around all its main averages. The trade can work at the black line / yesterday's high. Stop Loss: yesterday's low.
Axsome Therapeutics AXSM 0.00%↑ stays constructively on the EMA21. Look at the accumulations & low volumes when digesting. This mean reversion might work if the price goes above the recent highs. Stop Loss: EMA21.
DCP Midstream DCP 0.00%↑ is very close to a Green Line Breakout. Also, an earlier entry might be at the black line. Stop Loss: 5%.
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.
In order to learn more about trading, you may want to read:
Some good ones you are watching kudos to your work.