Trading Plan: 23 February 2022
Another distribution day for Nasdaq (-1.23%) as the price tested the January lows. I will watch the key level 13,000. If broken, Nasdaq might fall relatively easily another 600 points to the next support. Definitely, not a time to bet big on the market during these days. More than that, we noticed already how volatility kicks in when war news is available.
The important yesterday volumes from the SP-500 sent the price down by 1.01%. The new distribution day might signal a downtrend continuation, but a possible reversal is also possible as, during the last part of the day, buyers tried to save the closing price.
In the news
Biden says the U.S. will sanction Russian banks, sovereign debt and individuals after Ukraine ‘invasion’.
Airbus plans to test hydrogen engine on A380 jumbo jet to fly in 2026.
SoFi plummeted 10% today on news of its M&A deal. SoFi announced its purchase of Technisys SA, a banking-software company, for $1.1 billion.
Truth Social, a new social media platform backed by former President Donald Trump, sat at the top of Apple’s download charts for free apps as of Tuesday morning.
Sectors
Best yesterday sector: Utilities, then Healthcare. Worst sector: Consumer Cyclical.
Best weekly sector: Consumer Defensive, then Basic Materials. Worst sector: Consumer Cyclical.
Best monthly sector: Energy, then Basic Materials. Worst sector: Communication Services.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 53.49
VIX (neutral under 20): 28.81
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.99
CNN Fear & Greed: 35 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 25.52%
Stocks above SMA200 (neutral above 30): 28.09%
Number of stocks that increased yesterday by more than 4%: 155
Number of stocks that decreased yesterday by more than 4%: 479
Earnings Reports
Teladoc tanked 7.35% to two-year lows despite an earnings and sales beat. The telemedicine provider reported guidance for full-year 2022 revenue between $2.55 billion and $2.65 billion.
Home Depot shares fell over 8% today after the company reported Q4 earnings. The home improvement store beat on revenue, but missed on earnings estimates — Home Depot credited inflation for some of its sales boost, and that didn’t sit well with investors.
Macy’s reported fiscal fourth-quarter earnings and sales that outpaced analysts’ estimates and said that a strategic review has prompted the retailer to accelerate its turnaround plans.
Noteworthy earnings reports for today: $LOW, $BCS, $BKNG, $JMIA, $LMND, $OSTK, $PAAS, $TAP.
What to trade today
This up and down market is not easy for a trend follower trader. News influences price big and volatility is much higher than usual. Trading these days works for hit-and-run strategies. As already advised, if trading, consider using smaller positions with a tighter stop loss. And take profits sooner.
Ambarella ($AMBA) wasn’t able to keep its SMA200, tried yesterday to go up but it was rejected. If the market is still action based on the bad news, a short is possible under the black line with Stop Loss at yesterday high.
Digital Turbine ($APPS) has big volumes on yesterday on its way down. A short might work if the price is below the black line. Stop Loss at yesterday high.
TaskUs ($TASK) tested the lows and made a topping tail yesterday, suggesting the up move was limited. It might be shorted under the black line. Stop Loss at $29.
If the market turns up, my watchlist for longs is:
DataDog ($DDOG) had very good earnings and it is a growth stock company. It stayed well during these turbulent times and it seems it wants to go up if the market is good. Long if above the black line and Stop Loss at EMA21.
Doximity ($DOCS) also showed a good RS (relative strength) and it consolidates nicely. It can be bought at $58.10 with a Stop Loss at $55.
Everspin Technologies ($MRAM) is a small company, but based on its price action, it might break out if the market turns up. It can be bought above the black line with Stop Loss at EMA21 (but not more than 7%).
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.