Trading Plan: 14 February 2022
The relief rally has ended with a big volume on Friday. Nasdaq (-2.78%) erased mostly all the gains and it might want to test the lows again. Under this level, if the market deteriorates and new bad news came in regarding the war in Ukraine, the next possible support is at 12.400.
SP-500 (-1.95) also headed south with a higher than average volume and closed under the SMA200. Definitely not a time to make speculations as the price needs to find a bottom again and stabilize by forming a base.
In the news
Japan’s Nikkei falls more than 2% as investors monitor Ukraine tensions; oil rises over 1%.
Cisco reportedly makes an offer for Splunk. Networking giant and tech conglomerate Cisco has reportedly made a ~$20 billion offer for Splunk.
Travel stocks have endured months of uncertainty, but there could be a light at the end of the tunnel.
Cryptos retreated from last week’s gains amid newfound geopolitical turmoil.
Sectors
Best yesterday sector: Energy, then Utilities. Worst sector: Technology.
Best weekly sector: Basic Materials, then Energy. Worst sector: Communication Services.
Best monthly sector: Energy, then Consumer Defensive. Worst sector: Consumer Cyclical.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 66.8
VIX (neutral under 20): 27.36
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.12
CNN Fear & Greed: 33(Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 31.50%
Stocks above SMA200 (neutral above 30): 30.15%
Number of stocks that increased yesterday by more than 4%: 187
Number of stocks that decreased yesterday by more than 4%: 342
Noteworthy Earnings Reports / Events
Under Armour earnings top estimates on Friday, but shares fall as supply chain issues hurt growth.
This week main earnings:
Earnings Reports on Monday:
What to trade today
Closed almost all positions mostly when they pass the previous day low. Still long $CVX (to which I added at $138 to make a full position again) and a few partials that didn’t undercut the Tuesday low.
I do not see many constructive and low-risk patterns in the sectors showing RS (relative strength). The only that I like is $CNQ.
Will watch the momentum in Aerospace & Defense (good wide range bars igniting from the main averages - $LMT, $NOC) and Materials.
Some selling short ideas:
Matterport ($MTTR) found the support again and it looks that this time is determined to break it. If the price is under the black line, the stock can be sold short with a 7% Stop Loss.
Lucid Motors ($LCID) might break down. It might be sold short under the black line. Stop Loss: 7%.
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.
Good Luck and Happy Valentine’s Day!