Trading Plan: 20 October 2022
Nasdaq (-0.85%) gapped down and closed the day forming a Doji candle. This might suggest indecision… towards the bearish side. After another distribution day, we can only observe the price action and keep looking for clues: above Tuesday’s high or yesterday’s low. Watching the marked levels as well.
SP-500 (-0.67%) closed below EMA21 and the price seems it wants to be both in a bullish pattern (bull flag) and can ignite above Tuesday’s high or we have just an ordinary EMA21 visit (mean reversion) and the downtrend will continue.
In the news
Biden administration awards $2.8 billion in grants for electric vehicle battery manufacturing.
Mortgage demand drops to a 25-year low, as interest rates climb.
Markets and economists are increasingly certain of recession.
Chip Maker TSMC Weighs Expansion in Japan to Reduce Geopolitical Risk.
US government seeks court injunctions against six e-cigarette manufacturers as FDA steps up enforcement.
Sectors
Best yesterday sector: Energy, then Technology. Worst sector: Real Estate.
Best weekly sector: Energy, then Financial. Worst sector: Consumer Cyclical.
Best monthly sector: Energy, then Healthcare. Worst sector: Utilities.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 19.84
VIX (neutral under 20): 30.76
Put / Call Ratio (neutral between 0.7 and 1): 1.02
CNN Fear & Greed: 34 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 33.74%
Stocks above SMA200 (neutral above 30): 26.18%
Number of stocks that increased yesterday by more than 4%: 126
Number of stocks that decreased yesterday by more than 4%: 479
McClellan Oscillator (neutral between -100 and 100): 54.25
Earnings Reports
Tesla reported $1.05 in adjusted EPS, ahead of expectations of 99 cents, on revenues of $21.45 billion, lighter than the $21.96 billion expected. IBM surpasses quarterly projections and lifts its full-year revenue forecast. Procter & Gamble’s earnings beat as higher pricing offsets the drop in volume. Globally critical chip firm ASML jumps 6% after earnings; sees limited impact from U.S. China curbs.
Noteworthy earnings reports for today:
What to trade today
Except for Energy, all sectors closed in red yesterday. I liked the price action of a few individual stocks in the mentioned sector and we probably see them higher and higher.
After two “optimistic” days, the market is back under pressure. The risk is still high.
I will watch the Energy sector and I will keep an eye on $VIST, $MUR, $DVN, $COP, $TPL, $LNG, $CEG, $MPC or $DCP.
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: