Trading Plan: 26 January 2022
Nasdaq lost momentum and closed lower (-2.28%) with average volumes. Net lows were not so significant, but the tension is still in the air as there are many uncertainties now. Keep an eye on the support levels in case things are deteriorating.
SP-500 closed also in red (-1.22%) showing a Doji candle for yesterday. The price is still under SMA200. There is no clear intention, it seems the price wants to build a base, but no action until clearing the Monday long wicks. If things go south, the next important support is at ~$4050.
Energy and especially Oils continued the rally with very nice gains.
Growth stocks imitated the indexes and stayed above their lows as their high valuations are compressing now - this might be a good sign for growth investors. Will be their bottom?! We will see.
During later today's meeting, the Fed could signal a March interest rate hike and that further policy tightening is coming (even if many analysts said that the Federal Reserve should leave interest rates unchanged, but stop immediately QE). There is no reason to bet, just to observe.
GM to spend $6.6 billion on EV plant investments in a bid to dethrone Tesla in electric car sales by 2025.
Microsoft topped earnings and revenue expectations after the bell, the price went down 6%, but the buyers came in and send the price back. Is this a bullish sign?!
Sectors
Best yesterday sector: Energy, then Financial. Worst sector: Technology.
Best weekly sector: Energy, then Consumer Defensive. Worst sector: Consumer Cyclical.
Best monthly sector: Energy, then Financial. Worst sector: Technology.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 56.73
VIX (neutral under 20): 31.16
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.89
CNN Fear & Greed: 37(Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 23.06%
Stocks above SMA200 (neutral above 30): 27.86%
Number of stocks that increased yesterday by more than 4%: 116
Number of stocks that decreased yesterday by more than 4%: 148
Noteworthy Earnings Reports / Events for today
Intel ($INTC) is slated to unveil its fourth-quarter earnings report after the Jan. 26 close. Wedbush analyst Matt Bryson sees the possibility for a Q4 beat. Overall, consensus estimates for Intel’s fourth-quarter are for earnings to arrive at 90 cents per share (-40.8% YoY) and revenue to land at $18.3 billion (-8.3% YoY).
Tesla ($TSLA) will also report its fourth-quarter earnings after Wednesday’s close. TSLA stock went on a tear in the second half of 2021. Analysts are expecting solid results for Tesla’s fourth quarter. Consensus estimates are for earnings of $2.26 per share, +182.5% YoY, and revenues of $16.4 billion — a 52.2% increase over the year prior.
Other earnings reports:
What to trade today
This is not the time to be aggressive as there is a lot of news coming in. Even if some stocks are trying to form some bases, we are too early to identify clear patterns.
Also, I noticed a lot of inside day candles yesterday and this might signal that both traders and investors are waiting for (some) confirmations. All eyes are on the Fed and… remember, do not fight the Fed!
Please 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.