Trading Plan: 18 February 2022
Nasdaq (-2.88%) is testing this week low mostly due to the bad news regarding the war in Ukraine. The macroeconomic environment also increased the fears in the market. Oils and Gold were the industries where money kept on coming.
SP-500 closed also in red (-2.12%), just a few points above the Monday low. There might be a small pullback, but the overall short term is likely to be bearish. A stronger consolidation is needed now for a stronger trend. Until then, I will watch for the 4365 area and January lows as well if the case.
In the news
President Biden announced that there is a “high risk” of Russia invading Ukraine “within the next several days.”
Inflation continues its climb to its 40-year highs, and this week showed U.S. jobless claims surge to 248,000, a week-over-week increase.
The 10-year Treasury yield decreased 2% and gold is up 1.6% on the day.
Fed’s Bullard says inflation ‘could get out of control,’ so action is needed now
Coinbase CRUSHED the Super Bowl ad game. The company’s advertisement, which was a QR code floating around the screen boosted Coinbase installations by 309% week-over-week.
Sectors
Best yesterday sector: Consumer Defensive, then Utilities. Worst sector: Technology.
Best weekly sector: Consumer Defensive, then Energy. Worst sector: Technology.
Best monthly sector: Energy, then Financial. Worst sector: Communication Services.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 53.49
VIX (neutral under 20): 28.11
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.04
CNN Fear & Greed: 37 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 34.40%
Stocks above SMA200 (neutral above 30): 31.14%
Number of stocks that increased yesterday by more than 4%: 92
Number of stocks that decreased yesterday by more than 4%: 695
Earnings Reports
Palantir plummeted 14.75% to fifteen-month lows after falling short of earnings expectations. Revenue grew 34% year-over-year. Roku plunged 30% in extended trading due to weak revenue and outlook.
Noteworthy earnings reports for today:
What to trade today
Yesterday was a perfect day for the shorts, mostly all worked nicely: $TWLO and $ZM or the ones announced yesterday on Twitter ($DOCU and $ROKU).
After such red wide range bars, there are not too many low risks short setup. Even if a bounce is expected after this massive drop, the downtrend seems more likely. I would not try longs now, but let’s watch the price action.
$AEHR stayed very well on yesterday, but if the market continues down, a short might work. Stop Loss at yesterday high.
$AMBA shows a similar situation. Please note that the volumes were not big yesterday, they showed good RS. But if the market is weak, Ambarella might go south as well. Stop Loss at EMA21.
$APPS might break down, short under the black line with Stop Loss at high of yesterday.
Crypto stock $COIN followed the market and its coins. Short under the black line with Stop Loss at EMA21.
$NET might work with a closer Stop Loss (EMA21). Short if under the black line.
UiPath ($PATH) also shows a good short setup. Closed under the EMA21 and went down. Short under the black line, Stop Loss at EMA21.
TaskUS ($TASK) can go lower if it breaks the black line. Stop Loss at 7%.
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.