Trading Plan: 26 September 2022
Nasdaq (-1.80%) made a relatively big gap down but succeeded (if I can say this on a positive note) in forming a beautiful bottoming tail candle. Of course, this doesn't mean anything without confirmation and eventually a re-test, but we might see at least a reversal from this extreme oversold condition (see McClellan Oscillator level). I do not recommend at all trying to guess the bottom.
SP-500 (-1.72%) had a similar move. Basically, we have a downtrend, another distribution day, bad FED news about inflation, and VIX at almost 30 vs. extreme oversold condition (which in fact doesn’t count at all in a bear market). Hard to catch a good wave. Patience.
In the news
Raytheon's $985 mln hypersonic award puts them far ahead in the contracting race.
U.S. officials warn the Kremlin over nuclear weapons talk.
GM investing $760 million in Toledo factory to make electric car drive units.
Apple says it will manufacture iPhone 14 in India.
Apple Music to Replace Pepsi as Sponsor of NFL’s Super Bowl Halftime Show.
Amazon to hold mid-October sale to capture more holiday spending.
Sectors
Best yesterday sector: Healthcare, then Real Estate. Worst sector: Energy.
Best weekly sector: Consumer Defensive, then Utilities. Worst sector: Energy.
Best monthly sector: Utilities, then Healthcare. Worst sector: Energy.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 29.59
VIX (neutral under 20): 29.92
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.36
CNN Fear & Greed: 24 (Extreme Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 12.15%
Stocks above SMA200 (neutral above 30): 18.08%
Number of stocks that increased yesterday by more than 4%: 99
Number of stocks that decreased yesterday by more than 4%: 727
McClellan Oscillator (neutral between -100 and 100): -243.59
Earnings Reports
No noteworthy earnings reports for today.
Weekly snapshot:
What to trade today
Another day with all sectors in red. Rotation all over. Recent strong stocks hit. Inflation data. Market is labeled as “in correction” by IBD while testing the June lows. The sentiment and breadth are worse and worse.
Even if all these could signal a good momentum for the contrarian, my recommendation is to wait patiently. Like a surfer waits for the perfect wave:
Since trading is not recommended, preparation surely is. Here are the top 20 industry groups:
And some individual stocks that are holding well: $ENPH, $FSLR, $VRTX, $RXDX, $SRPT, $AKRO, $ALB, $LTHM, $SWAV, $XMTR, $WOLF, $ON, $TH, $INSW, $CCRN.
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: