Trading Plan: 22 September 2022
Nasdaq (-1.79%) tried to reverse the trend in the morning, but after Powell’s speech, the price kept on going lower and lower and closed very weak at the lows of the day. The last support is broken and there are many chances to test the lows now. Just watching now: all the previous ones from June-July.
SP-500 (-1.71%) also undercut the support after a positive attempt in the morning. The volumes were above-average and this new distribution day might signal a bumpy road ahead. The same idea here, yesterday’s price action favors the odds for testing the June-July lows.
In the news
Fed raises rates 0.75 percentage points, signals more to come.
Apple is to move 25% of iPhone production to India by 2025 and 20% iPad and Apple Watch to Vietnam.
Xpeng breaks out of a lower price range with its most expensive car to date.
Existing home sales fall in August, and prices soften significantly.
Ray Dalio says stocks and bonds have further to fall and sees a U.S. recession arriving in 2023 or 2024.
Sectors
Best yesterday sector: Consumer Defensive, then Utilities. Worst sector: Consumer Cyclical.
Best weekly sector: Consumer Defensive, then Financial. Worst sector: Energy.
Best monthly sector: Energy, then Utilities. Worst sector: Communication Services.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 33.86
VIX (neutral under 20): 27.99
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.05
CNN Fear & Greed: 31 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 18.57%
Stocks above SMA200 (neutral above 30): 23.85%
Number of stocks that increased yesterday by more than 4%: 72
Number of stocks that decreased yesterday by more than 4%: 405
McClellan Oscillator (neutral between -100 and 100): -148.93
Earnings Reports
Lennar LEN 0.00%↑ earned $5.03 per share compared to $4.52 last year. Revenues were up 29% YoY to $8.9 billion, with deliveries rising 13% YoY and an average sales price of $491,000.
Darden Restaurants DRI 0.00%↑ will report its fiscal first-quarter results ahead of today's open. Analysts see DRI reporting earnings of $1.56 per share in its fiscal first quarter, down 11.4% from the year-ago period. Revenue is forecast at $2.5 billion (+8.7% YoY).
Fiscal fourth-quarter earnings from Costco Wholesale COST 0.00%↑ are due out after today's close. Consensus estimates for COST's fiscal Q4 are for earnings of $4.16 per share (+6.7% YoY) and revenue of $72.1 billion (+15% YoY).
Other noteworthy earnings reports for today:
What to trade today
I have no doubt that Livermore would have gone fishing and Darvas dancing during these times.
Hard to trade in this environment, longs are out of the question right now and shorts are extended with no low-risk entry.
So, the best way is to watch and identify stocks with good RS and build your watchlist. Good times surely will come.
No need to say, I do not plan to open new trades today.
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: