Trading Plan: 14 January 2022
Nasdaq broke lower (-2.51%) and the red wide range bar from yesterday may signal a downtrend. Also, it closed twice under SMA30 on weekly (not showed here), so more headwinds are likely to happen. There were 95 new highs vs. 259 new lows.
SP-500 moved in the same direction (-1.42%) confirming the damage in the market. Since the volume bar was high, we might see a continuation on Friday.
Ford (F) made a breakout on yesterday and was able to keep the pivot point even if it retraced in the second part of the day to the market weakness.
Taiwan Semiconductor Manufacturing ($TSM) showed very good earnings ($1.15 vs. $1.12 estimated and 15.74 billion sales) and gapped up at the beginning of the day.
Growth stocks didn’t continue the reversal and plunged dragging down the entire market. They peaked in early November, before the indices and they might reach the bottom sooner as well. The next quarter can be bumpy.
It seems that bulls and bears keep on fighting for dominance and since a clear trend is visible, staying out of the market makes sense now.
Sectors
Best yesterday sector: Consumer Defensive, then Utilities. Worst sector: Technology.
Best weekly sector: Energy, then Basic Materials. Worst sector: Technology.
Best monthly sector: Energy, then Basic Materials. Worst sector: Technology.
Sentiment
NAAIM (neutral between 70 and 90): 74.78
VIX (neutral under 20): 20.31
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.96
CNN Fear & Greed: 51 (Neutral)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 46.37%
Stocks above SMA200 (neutral above 30): 42.91%
Number of stocks that increased yesterday with more than 4%: 104
Number of stocks that decreased yesterday with more than 4%: 486
Noteworthy Earnings Reports for today
What to trade today
There many big red bars on yesterday, trying to jump in now in the train is dangerous. Indeed, there were a lot of shorting opportunities during the da on yesterday. Waiting for low risk entries is safer than chasing stocks.
Again, if you want to trade, please consider test buys with partial sizes and do not forget to use tight stops. Here it is a suggestion:
Ciena Corporation ($CIEN) is a short candidate under the black line with Stop Loss at the yesterday high. Failed to make the reversal and the increasing volumes when declining might indicate a down leg now.
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.