Trading Plan: 18 August 2022
Nasdaq (-1.25%) made a pullback to its EMA10. The move is ‘normal’, the price was extended vs. its SMA50 and… definitely there are some traders taking their profits after the rally. Watching the EMA10 and EMA21 for now.
SP-500 (-0.72%) made a similar move. We will watch the way it will consolidate: in price (by keeping an eye on the recent lows and EMA10/EMA21) or in time (as it will be constructive to see the price staying in the marked channel and waiting for the main averages to catch up). The next target is SMA200 which will be a major milestone.
In the news
Apple is reportedly in talks to make Apple Watches and MacBooks in Vietnam.
Bed Bath & Beyond stock drops 18% after investor Ryan Cohen plans to unload a huge stake.
Fed minutes show more rate hikes in the pipeline, but pace could slow.
U.S. retail sales flat on gasoline price drop; consumer spending resilient.
The world’s largest sovereign wealth fund loses $174 billion in the first half, cites inflation and war in Europe.
Sectors
Best yesterday sector: Energy, then Utilities. Worst sector: Communication Services.
Best weekly sector: Consumer Defensive, then Utilities. Worst sector: Healthcare.
Best monthly sector: Industrials, then Technology. Worst sector: Healthcare.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 71.59
VIX (neutral under 20): 19.90
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.91
CNN Fear & Greed: 55 (Neutral)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 76.59%
Stocks above SMA200 (neutral above 30): 37.08%
Number of stocks that increased yesterday by more than 4%: 117
Number of stocks that decreased yesterday by more than 4%: 342
McClellan Oscillator (neutral between -100 and 100): 50.49
Earnings Reports
Cisco CSCO 0.00%↑ tops estimates on revenue and profit and gives an optimistic annual sales forecast. Target’s TGT 0.00%↑ earnings take a huge hit as retailer sells off unwanted inventory. Lowe’s LOW 0.00%↑ reports mixed second-quarter results, citing shortened spring that hurt sales.
Warehouse clubs like BJ's Wholesale Club Holdings BJ 0.00%↑ have been solid choices for investors in 2022. BJ stock is up roughly 3% for the year-to-date, compared to a more than 11% decline for the S&P 500. Analysts are anticipating solid revenue growth in its second quarter, as well, with the consensus estimate of $4.6 billion up 10% over the year-ago figure. However, earnings per share are expected to decline 4.9% to 78 cents.
Other noteworthy earnings reports for today:
What to trade today
The pullback was expected in a way as the index price was quite extended. This is not bad if the price doesn’t violate the lows (it is normal for the price to come back to its main averages).
There are still stocks in the game: DQ 0.00%↑ CLR 0.00%↑ NFG 0.00%↑ CRWD 0.00%↑ ENPH 0.00%↑.
Besides these, I will watch CELH 0.00%↑, very good price action, but please take into consideration it is not in the top group(s). There are two possible entries: above Wednesday high and/or at ATH. Stop Loss: at EMA21 in the first case and no more than 5% in the second case.
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:
Follow me on Twitter for market updates.