Trading Plan: 20 March 2023
Nasdaq (-0.74%) made a pullback with above-average volumes, the price stabilized at the breakout line and remained above all key averages. The price action is not bad, we need to identify the next move: uptrend continuation (a price above 11.830 will be very constructive.) vs. failed breakout and a price back to the recent lows.
SP-500 (-1.10%) retraced with important volumes after the wide range bar and lost its SMA200. There is much negative news in the market regarding the banks and the index being below all the key averages is not a good thing. Watching the marked trend line level vs. the recent lows.
In the news
SBNY 0.00%↑ New York Community Bancorp to take over failed Signature Bank
CS 0.00%↑ UBS Agrees to Buy Credit Suisse for More Than $3 Billion
Hong Kong shares slide 3%; Asia markets mostly fall after UBS buys Credit Suisse.
META 0.00%↑ Meta launches paid verification on Instagram and Facebook in the US.
Bitcoin Is Rising After UBS-Credit Suisse Deal.
Sectors
Best yesterday sector: Communication Services, then Technology. Worst sector: Financial.
Best weekly sector: Communication Services, then Technology. Worst sector: Energy.
Best monthly sector: Communication Services, then Technology. Worst sector: Financial.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 41.92. The number is still low, we will monitor the new number later this week).
VIX (neutral under 20): 25.31 (increasing back above 25, we need less volatility)
Put / Call Ratio (neutral between 0.7 and 1): 0.98. The number is in the normal range.
CNN Fear & Greed: 25 (Extreme Fear). The number decreases from 28, it seems investors are taking the bad news very seriously.
Breadth
Stocks above SMA40 (neutral between 30 and 80): 18.71%. This recent decline sent this indicator to its lows and we might expect a reversal. But take into consideration that a level below 30 is not a healthy sign.
Stocks above SMA200 (neutral above 30): 37.11%. The number is declining, so not a good sign.
Cumulative 4-Week Hi-Low & Volume Index continued the downtrend. We want to see new highs and new volumes entering the market, not money going out of the market.
Nasdaq Advance / Decline Line lost its recent lows level, the outlook seems bearish.
Number of stocks that increased yesterday by more than 4%: 213
Number of stocks that decreased yesterday by more than 4%: 823
McClellan Oscillator (neutral between -100 and 100): -149.65. The number is in the Oversold area and we might see a pause/reversal in the market (but… in Bear markets what is Oversold can become more Oversold!).
Earnings Reports
Noteworthy earnings reports for today
(These are the stocks to watch for a possible earnings gap).
The most anticipated earnings releases for this week:
What to trade today
Hard to say if we are out of the woods as the American bank system is “too big to fail”. I am not a specialist, so I think it is better to wait patiently on the side.
More than that, we know that higher rates can kill banks. Now, the target rate probabilities are balanced: 0 vs. 25 bps. So, we can expect an accepted longer inflation. We will see more on Wednesday.
Taking into consideration all of the above about the market, I do not plan to trade before the FED meeting but I will watch:
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: