Trading Plan: 14 September 2022
Nasdaq (-5.16%) gapped down, lost the main averages, closed the previous gaps and stopped just above last Tuesday's low with above-average volumes. August’s Consumer Price Index rose 0.1% MoM and 8.3% YoY (investors expected a 0.1% decline). No need to forecast, just watching the key levels for now: the marked support and Monday’s high (if the case) for now.
SP-500 (-4.32%) had the same behavior. It is very likely to have a choppy market until the FED meeting on the 21st of September (here are the updated target rate probabilities). Until then, my main task will be to observe, there is no need to be a hero in these conditions. Watching the recent support and the SMA50 / EMA21 for clues.
In the news
Dow Slides Nearly 1,300 Points on High Inflation Reading.
Oil prices could find a floor near $80 per barrel as the Biden administration considers refilling the Strategic Petroleum Reserve.
Vedanta, Foxconn to invest $19.5 billion in India's Gujarat for chip, display project.
Boeing delivered 35 planes in August as new Dreamliners returned.
Twitter shareholders approve Elon Musk's $44 billion takeover offer.
Sectors
Best yesterday sector: Utilities, then Energy. Worst sector: Communication Services.
Best weekly sector: Basic Materials, then Consumer Cyclical. Worst sector: Communication Services.
Best monthly sector: Energy, then Utilities. Worst sector: Technology.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 27.33
VIX (neutral under 20): 27.27
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.15
CNN Fear & Greed: 40 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 32.94
Stocks above SMA200 (neutral above 30): 27.71
Number of stocks that increased yesterday by more than 4%: 104
Number of stocks that decreased yesterday by more than 4%: 1020
McClellan Oscillator (neutral between -100 and 100): -14.54
Earnings Reports
Noteworthy earnings reports for today:
What to trade today
Indexes are down, all sectors closed in red, bad news regarding inflation (see the chart below), 6-day distribution on both Nasdaq and SP-500 and VIX spiked again above the 25 level = Absolutely no need to force new trades!
Even if there are some good-looking stocks ARLP 0.00%↑ VIST 0.00%↑ TRMD 0.00%↑ AXSM 0.00%↑ DCP 0.00%↑ LNG 0.00%↑ SWAV 0.00%↑ ENPH 0.00%↑ EVH 0.00%↑ TH 0.00%↑, I do not recommend new longs now. Just watching and waiting for the market to settle and a good pattern for a low-risk entry.
When opening a new position, the entry should be above a previous candle in order to see strength there. And increased volume (min. +50%, better >2-300% - see Volumes Buzz on TC2000 or Relative Volume on FinViz). This basic rule will help you to avoid weak stocks.
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: