Trading Plan: 18 January 2022
Nasdaq was rejected by the SMA200 and closed in green (+0.59%), the dip was quickly bought and the price is again in the channel. The next support is not near and since there were only 68 new highs vs. 437 new lows, caution remains. Energy remains the strong sector due to the Oils ($FANG, $OVV, $CVX, etc.)
SP-500 shoed more or less the same idea, the price is still in the channel. All good for now, but we I will watch closely since the market is still correction and both scenarios need to be considered: reversal vs. dead cat bounce.
The downtrend is present in many stocks, they need now very long bases. Many stocks made new lows, catching the falling knife is the worst solution now. To stabilize first, the need to stop making new lows and start trading sideways with decreasing volumes. I will look for their main KMA (key moving averages) to stop declining and start to flatten out (and crossing, the small ones higher than the bigger ones).
IBD assess the market as Uptrend under pressure.
Consumer prices rose faster in 2021 than they had in any 12-month period since 1982 and higher inflation is believed to be impacting consumer spending patterns. Domino’s Pizza CEO Ritch Allison said the chain plans to reduce the number of chicken wings in its $7.99 deal from 10 to eight.
According to Reuters, the company has delayed initial production of its futuristic SUV to early 2023. Musk is expected to reveal more about the Cybetruck production start during the company’s earnings call, scheduled for January 26.
Sectors
Best yesterday sector: Energy, then Technology. Worst sector: Real Estate.
Best weekly sector: Energy, then Basic Materials. Worst sector: Real Estate.
Best monthly sector: Energy, then Basic Materials. Worst sector: Technology.
Sentiment
NAAIM (neutral between 70 and 90): 74.78
VIX (neutral under 20): 19.19
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.09
CNN Fear & Greed: 55 (Neutral)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 43.83%
Stocks above SMA200 (neutral above 30): 41.32%
Number of stocks that increased yesterday with more than 4%: 202
Number of stocks that decreased yesterday with more than 4%: 193
Noteworthy Earnings Reports for today
What to trade today
Semiconductors are still in the game forming good patterns ($MU and $QCOM are still on the watchlist as per last week recommendations — they are still in the buying zone), while Oils continue to move higher ($DVN, $CVX good profits from the entry).
$VRTX is also acting well, Stop Loss at breakeven now. Also, $MRNA works well on the short trade, Stop Loss may be tighten as well.
Hess Corp ($HES) in Oil (Energy) looks interesting. A good support is a little bit far, so the Stop Loss might be put a at 4–5% if volumes come at the opening.
Same idea for $OVV.
Deere ($DE) shows a long base, with a recent bull flag. Entry above the black line with Stop Loss at $372.
ZIM Integrated Shipping ($ZIM) is still at the highs, this can be an opportunity to buy above the Friday high with Stop Loss at Friday low.
BOEING ($BA) is trying to get out from the big W pattern and also to break the downtrend channel. If volumes come, an entry might be at the black line with Stop Loss at Friday low.
Amgen ($AMGN), wide range bar igniting, entry above the black line with Stop Loss at Friday low.
Asana ($ASAN) is still a good candidate for a short as previously advised.
Angi ($ANGI) can be shorted under the black line with Stop Loss at EMA21.