Trading Plan: 25 February 2022
I think yesterday was one of the biggest reversals candles I saw for Nasdaq (3.34%). Support from last March was rejected and the price came back to the actual base. It is a positive sign that the close was above the January lows with important volume.
SP-500 (+1.50%) made the same reversal action with important volume. It seems it formed a double pattern, but we need the last part to be built. Anyway, during the news-driven market, it is not easy to act. I am looking for a volatility decrease and a solid base to be formed.
In the news
Russia Intensifies Attack, Targets Kyiv. Biden unveils new Russia sanctions.
Global Markets Stabilize After Turmoil Sparked by Ukraine-Russia Crisis
Russia-Ukraine conflict could cause inflation to hit 10%
Coinbase Profit Surges During Bitcoin’s Wild Rally and Selloff
The world depends on Taiwan for semiconductors.
Bitcoin, the world’s largest cryptocurrency, fell 6.6% over the past 24 hours
Sectors
Best yesterday sector: Technology, then Communication Services. Worst sector: Consumer Defensive.
Best weekly sector: Utilities, then Energy. Worst sector: Consumer Cyclical.
Best monthly sector: Energy, then Basic Materials. Worst sector: Real Estate.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 44.41
VIX (neutral under 20): 30.32
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.03
CNN Fear & Greed: 25 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 24.45%
Stocks above SMA200 (neutral above 30): 26.31%
Number of stocks that increased yesterday by more than 4%: 101
Number of stocks that decreased yesterday by more than 4%: 174
Earnings Reports
Moderna moved up 13.79% on the back of an earnings and sales beat. Covid vaccine sales are expected to reach $19 billion in 2022, up from $17 billion previously. Zscaler ($ZS) dove 6.39% in extended trading, although it surpassed earnings and sales projections. Coinbase topped expectations for earnings and sales handily, but trading volume is expected to drop in Q1. $COIN lost 2.11% after hours. Shares of Etsy ($ETSY) soared as much as 32.18% in extended trading on Thursday. Alibaba ($BABA) shares slip after it reports slowest ever revenue growth and misses expectations.
Noteworthy earnings reports for today: $AES, $EOG, $FL, $LI.
What to trade today
Even if there was a very strong reversal day, it is very hard to initiate new positions now. It seems almost all the strong stocks rejected the previous lows or made a wide range bar. Being stopped out on all shorts yesterday, I am 100% cash and wait for setups to be formed in order to be able to initiate low-risk entries.
No planned trades for today.
Off-topic: for investing, starting DCA in strong growth or indexes, might work well in the long term.
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.