Trading Plan: 18 May 2022
Nasdaq (+2.76%) advanced on the fourth day from the bottom with higher volumes than the previous day. It may count as FTD (follow-through day)… but it would have been better to have stronger volumes. Watching now the resistance areas and EMA21 / SMA50 as well to see if the price goes above or if it is just a mean reversion and the prices may continue then lower.
SP-500 (+2.02%) had a similar movement. Watching the resistance levels while keeping an eye on the support at the 3850 area. It will be good to see Institutional money coming in, if not, a mean reversion (EMA21 or SMA50) might occur.
In the news
Goldman Sachs cuts its China GDP forecast to 4% on Covid controls.
Finland and Sweden formally apply to join the NATO military alliance.
Netflix lays off 150 employees as the streaming service contends with big subscriber losses.
Elon Musk Says Twitter Deal Can’t Move Forward Without Clarity on Fake Accounts.
Wheat prices hit new all-time highs this week.
Powell says the Fed will not hesitate to keep raising rates until inflation comes down.
Sectors
Best yesterday sector: Consumer Cyclical, then Basic Materials. Worst sector: Consumer Defensive.
Best weekly sector: Energy, then Basic Materials. Worst sector: Consumer Defensive.
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): 26.10
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.02
CNN Fear & Greed: 16 (Extreme Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 23.61%
Stocks above SMA200 (neutral above 30): 26.05%
Number of stocks that increased yesterday by more than 4%: 807
Number of stocks that decreased yesterday by more than 4%: 82
McClellan Oscillator (neutral between -100 and 100): 61.07
Earnings Reports
Walmart missed earnings expectations for the fiscal first quarter, as the retailer felt cost pressure from fuel prices, higher inventory levels and overstaffing. Home Depot raised its full-year outlook after reporting solid quarterly earnings, fueled by the company’s strongest first-quarter sales on record.
First-quarter earnings from Lowe's ($LOW) are due out before Wednesday's open. Similar to Walmart, the home improvement retailer is facing hard comparisons from Q1 2021. Analysts, on average, are calling for a slim 0.9% YoY rise in earnings to $3.24 per share. And revenue is projected to be flat at $23.8 billion.
Other noteworthy earnings reports for today:
What to trade today
The market seems it wants to go higher now. There is some traction, but I will watch closely a potential mean reversion in some stocks.
For example, even if I bought $AMD yesterday (1/2 position), I will sell if the price goes below yesterday’s low.
Broadcom ($AVGO) formed a double bottom and might work if the price goes above yesterday's bar igniting from them SMA50. Stop Loss: SMA50.
C.H. Robinson Worldwide ($CHRW) is still in the game. A possible breakout above the black line. Stop Loss: EMA21.
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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