Trading Plan: 21 January 2022
Nasdaq (-1.3%) caught a lot of buyers in the morning and then continued its correction closing much lower with big volumes. There is no real immediate support, caution is required, the downtrend is likely to continue.
SP-500 (-1.1%) is going towards its SMA200, no real support till then. Another distribution day as volumes were important, higher than their average.
Peleton ($PTON) closed in deep red (-16.96%) after temporarily halted bike production due to low demand.
Netflix ($NFLX) expects lousy subscriber growth in Q1 2022 compared to the same period in 2021. Even if they announced that it would raise prices, stocked fell more than 21% in after-hours.
The Federal Reserve released its long-awaited study of a digital dollar, exploring the pros and cons of the much-debated issue and soliciting public comment.
Cryptocurrencies tumble, with bitcoin falling 7% and ether down 8% in the last 24 hours.
The 10-year Treasury Yield continues to trend higher.
Sectors
Best yesterday sector: Utilities, then Healthcare. Worst sector: Basic Materials.
Best weekly sector: Energy, then Utilities. Worst sector: Consumer Cyclical.
Best monthly sector: Energy, then Basic Materials. Worst sector: Healthcare.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 74.78 (not updated!)
VIX (neutral under 20): 25.59
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.99
CNN Fear & Greed: 52 (Neutral)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 26.88%
Stocks above SMA200 (neutral above 30): 31.41%
Number of stocks that increased yesterday with more than 4%: 98
Number of stocks that decreased yesterday with more than 4%: 450
Noteworthy Earnings Reports / Events for today
What to trade today
Even the good longs in Energy got hit, there is not time to be a here, tighten stops and follow Darvas strategy: “I decided to let my stop-loss decide”.
Many growth stocks made same lateral movements showing now a kind of small bases. Of course, they are not relevant yet, but they might give us an idea for the direction when breakup or breakdown. They broke down in November before the index, will they break up before the indexes?! Anyway, it is too early now, we will see.
Shorts acting well, just update the Stop Loss when the case. The yesterday shorts are still in the game, watching ($HUT, $S, $SNOW).
Tesla ($TSLA) has a good pattern for a short under the black line with Stop Loss at EMA21. Until now, it acted relatively good comparing with the market, but a break down might send the price almost $100 lower to the next support. A good risk reward potential.
Please do your own due diligence if or when placing a trade. All ideas stated here are my own and do not represent trading or investment advice.