Trading Plan: 16 May 2022
Nasdaq (+3.082%) made a strong reversal toward its main averages (EMA21, SMA50 and SMA200). For a real uptrend confirmation, we need to see more volumes on green candles (Institutions money) and the price at least above February / March lows and then above SMA50 and SMA200. Watching these levels, but keeping an eye on the support levels: 10800 and 10500.
SP-500 (+2.39%) made a similar move, but with lower volumes. Not necessarily a bad thing, but it would have been better to see more commitment in this reversal. Watching the three levels marked on the graph - the three black lines - for assessing the (new?) trend. Waiting for building higher lows and a base. Also, do not lose sight of the 38500 support area.
In the news
U.S. and Europe race to improve food supply chains after India bans wheat exports.
China has been quietly building a blockchain platform that aims to facilitate the deployment of technology for enterprises.
Elon Musk says Twitter deal on hold pending details on fake accounts; shares sink 9%.
Russia's neighbor Finland confirms it will apply for NATO membership.
Saudi Aramco Posts Record Quarterly Profit on Surging Oil Prices.
Sectors
Best yesterday sector: Consumer Cyclical, then Technology. Worst sector: Utilities.
Best weekly sector: Consumer Defensive, then Communication Services. Worst sector: Consumer Cyclical.
Best monthly sector: Energy, then Consumer Defensive. Worst sector: Consumer Cyclical.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 24.31
VIX (neutral under 20): 28.87
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.99
CNN Fear & Greed: 12 (Extreme Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 15.51%
Stocks above SMA200 (neutral above 30): 22.42%
Number of stocks that increased yesterday by more than 4%: 774
Number of stocks that decreased yesterday by more than 4%: 61
McClellan Oscillator (neutral between -100 and 100): -30.23
Earnings Reports
Noteworthy earnings reports for today:
What to trade today
We are not out of the woods yet. It is better to wait until we see a confirmed new uptrend (at least wait for FTD, Follow Through Day).
This strong rebound can be a short-covering, it is not at all a bottom confirmation. We need a base first, a possible retest of the lows and then to see money flowing in.
Testing the waters might be a good idea, no FOMO, just small position size(s) and progressive exposure.
Celsius ($CELH) had a very strong response when the market was positive. A trade over $57 with a Stop Loss at $55 might work.
Chevron ($CVX) is staying patiently above the EMA21 and SMA50. If the price goes above the black line, the trade might be trailed with SMA50.
Alpha Metallurgical Resources ($AMR) respects its main averages. A price above the black line might signal a working trade. Stop Loss at 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.
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