Nasdaq (+0.02%) advanced nicely in the morning, but once Chairman Powell started to speak, mostly all the stocks plunged and wiped the gains of the day. The closing price is still above the lows. Net lows continue their bearish trend. There are many chances to see a retest of the Monday low, 13,000 being key support now.
SP-500 (-0.15%) aging is moving in tandem with Nasdaq, but with volumes much bigger than the average. The next real support might be much lower at 4,050. When below the SMA200, the market tends to be vulnerable when bad news comes out.
The Federal Reserve expects to raise interest rates in March and that it will stop its bond-buying program in March as well. Powell said: “At this time, we haven’t made any decisions about the path of policy. I stress again that we’ll be humble and nimble”. The Fed anticipates that there will be three interest rate hikes this year and three rate hikes in 2023. More volatility on the road.
Tesla announced the results: EPS $2.54 adjusted, +218% (analysts expected $2.36). Revenue: $17.72 billion, +65% YoY (analysts expected $16.57 billion).
Apple is planning a new service that will let small businesses accept payment directly on their iPhones.
Sectors
Best yesterday sector: Energy, then Technology. Worst sector: Real Estate.
Best weekly sector: Energy, then Financial. Worst sector: Communication Services.
Best monthly sector: Energy, then Financial. Worst sector: Technology.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 56.73
VIX (neutral under 20): 31.96
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.00
CNN Fear & Greed: 36 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 20.31%
Stocks above SMA200 (neutral above 30): 25.78%
Number of stocks that increased yesterday by more than 4%: 169
Number of stocks that decreased yesterday by more than 4%: 322
Noteworthy Earnings Reports / Events for today
All eyes will be on Apple ($AAPL) when the iPhone maker unveils its fiscal first-quarter earnings report after Thursday’s close. The Wall Street pros, on average, are calling for earnings per share of $1.88 (+11.9% YoY) and revenues of $118.4 billion, which would mark a 6.3% improvement over its year-ago results.
Other earnings reports:
What to trade today
As already advised, this is not the time to be aggressive as there is a lot of news coming in. Even if some stocks are trying to form some bases, we are too early to identify clear patterns. Here are the notes of William O’Neal where he reminds us to not be aggressive in an unhealthy market.
Oils made topping tails ($DVN, $CVX, $HAL), some growth stocks showed some signs of breaking the channel but came back ($DDOG), ($BILL) and some made small bases for a possible downtrend continuation ($ZS, $MDB) or just went lower ($NET). These are just observations, there is no real base for a low-risk entry.
Even if I noticed some tradeable patterns ($DE), they are “phony, faulty and unsound” as O’Neal wrote. Their volatility can not help as lowering the risk.
Also, there are stocks that show good RS (relative strength) such as $SMBC that looks interesting, but since the market is not at its best, why risk more?!
The same for $MTDR: bullish pattern, but no good support.
And $BCC looks good. But the big red bar from yesterday is not a good sign, maybe it needs more time.
As you saw, there are not the best conditions to trade, mostly all examples have an issue. I just presented them as examples to show this fact.
If still want to trade, please consider using a lower size position and a tighter stop.
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.
thank you for sharing. Your morning prep is very similar to mine except yours is much better done!
Thank you very much! Step by step, I assure you that my prep was not so good a few years back. Build one thing at a time and put together what works for you.