Trading Plan: 21 June 2022
Nasdaq (+1.43%) reversed slightly after the new gap. Sitting here at old support looks like a bearish flag is forming. The trend is clearly down, but a rally to the means (EMA21 / SMA50) is also likely from this oversold position.
SP-500 (+0.22%) was rejected at old support and was able to close on the positive side. The volumes were more significant than on any of the previous days meaning that was an interest for buyers at this level. But this doesn’t mean we are out of the woods. Let’s wait for some consolidation first and preferably above the main averages (EMA21 and SMA50).
In the news
‘The situation is serious’: Germany plans to fire up coal plants as Russia throttles gas supplies.
Have markets hit the bottom? Ed Yardeni says it’s not over until inflation peaks.
Volvo says it has started testing trucks with fuel cells powered by hydrogen.
Fed’s Waller backs another jumbo 75 bp interest-rate hike in July.
Bitcoin bounces back after falling to new 2022 lows over the weekend.
Sectors
Best yesterday sector: Consumer Cyclical, then Real Estate. Worst sector: Energy.
Best weekly sector: Consumer Defensive, then Healthcare. Worst sector: Energy.
Best monthly sector: Consumer Cyclical, then Consumer Defensive. Worst sector: Energy.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 32.18
VIX (neutral under 20): 31.13
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.13
CNN Fear & Greed: 15 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 10.30%
Stocks above SMA200 (neutral above 30): 14.19%
Number of stocks that increased yesterday by more than 4%: 874
Number of stocks that decreased yesterday by more than 4%: 254
McClellan Oscillator (neutral between -100 and 100): -120.09
Earnings Reports
Noteworthy earnings reports for today:
What to trade today
Being in an oversold condition we might see a pullback. The market is in bearish territory, so we have already a divergence. Even if some growth stocks show decent double / triple bottom patterns in forming + some high volume on Friday and may lure you in, the environment is not the best one to be aggressive.
Although, keep an eye on AXON 0.00%↑, DE 0.00%↑, FTNT 0.00%↑, NET 0.00%↑, NVDA 0.00%↑, OKTA 0.00%↑, PATH 0.00%↑, S 0.00%↑, SWAV 0.00%↑, TEAM 0.00%↑ or ZS 0.00%↑. Also, solar names: SEDG 0.00%↑ or ENPH 0.00%↑.
Here is the best long setup for today in my opinion:
Rcm Technologies RCMT 0.00%↑ shows a huge increase (+200%) in the last 3 months, it respects the averages and it stays patiently around the EMA21. Volumes are low. A breakout above the black line + volumes would be very constructive in a… bull market.
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:
Follow me on Twitter for market updates.