Trading Plan: 14 March 2022
Nasdaq couldn’t hold the Thursday low and closed very weak (-2.18%) with above-average volume. After such a big drop, a pullback is expected, but the overall trend seems to be down. Since volatility is still above 30 and war news is still coming, this is not a time to bet on the market. Watch the temporary support at ~12.600 area and resistance at ~13.900 area.
SP-500 was down 1.30% on Friday with under average volume. Watch the levels marked with black lines for a direction. Again, not an ideal situation to bet aggressively as you may want to wait to see the market reaction after the FED decisions on Tuesday / Wednesday (FED Meeting). Expect a few days or even weeks for a better base.
In the news
Russia steps up attacks on western Ukraine ahead of peace talks.
Federal Reserve set for lift-off with 25bp hike.
Hong Kong’s Hang Seng index drops more than 5% as investors monitor China’s Covid wave
Warren Buffett is still buying Occidental Petroleum, adding shares worth $1.5 billion
Sectors
Best yesterday sector: Utilities, then Financial. Worst sector: Consumer Cyclical.
Best weekly sector: Energy, then Utilities. Worst sector: Consumer Defensive.
Best monthly sector: Energy, then Utilities. Worst sector: Consumer Cyclical.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 42.58
VIX (neutral under 20): 30.75
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.05
CNN Fear & Greed: 14 (Extreme Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 35.89%
Stocks above SMA200 (neutral above 30): 29.41%
Number of stocks that increased yesterday by more than 4%: 66
Number of stocks that decreased yesterday by more than 4%: 382
Earnings Reports
Noteworthy earnings reports for today:
What to trade today
In trading, when long, we are looking for trades that act as “two steps up, one step back”. This environment is “one step up, one step back” or even “two steps up, two / three steps back”.
Mostly all charts are choppy or show ignited big bars based on the news which are very risky to trade since there are no low-risk entries.
There are some industries with nice results (Solar, Oils, Fertilizers, Materials), but the market is weak. Money is taken out of the market, institutions didn’t start buying. No FOMO, wait for better conditions.
If trading, please consider using small positions and a tighter Stop Loss.
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.