Trading Plan: 27 May 2022
Nasdaq (+2.68%) had continued its reversal and approached two key points: EMA21 and ~12000 area which might offer some clues about the next moves. The volumes were higher than the day before, but it would have been better to see a stronger desire to enter the market for having a confirmation. If we will see even better volumes today and higher advance, it will be positive for the market.
SP-500 (+1.99%) also had an important move. Passing EMA21 and 4100 area will be a good signal. For an uptrend, we need to see money coming in (bigger volumes). Look for convergences in advances and volumes. If not, we might see just a mean reversion and a downtrend continuation.
In the news
Broadcom announces plans to buy VMware in a $61 billion deal.
Apple Boosting Pay Budget for Workers Amid Tight Labor Market.
Twitter shareholders sue Elon Musk, accusing him of manipulating stock.
Congressional Budget Office: GDP will grow by 3.1% in 2022 and that inflation has topped.
Helium shortage hits birthday and graduation parties.
GDP will grow by 3.1% in 2022 and that inflation has topped.
Sectors
Best yesterday sector: Consumer Cyclical, then Technology. Worst sector: Utilities.
Best weekly sector: Energy, then Financial. Worst sector: Communication Services.
Best monthly sector: Energy, then Utilities. Worst sector: Consumer Cyclical.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 33.19
VIX (neutral under 20): 27.50
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.93
CNN Fear & Greed: 17 (Extreme Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 33.09%
Stocks above SMA200 (neutral above 30): 25.71%
Number of stocks that increased yesterday by more than 4%: 665
Number of stocks that decreased yesterday by more than 4%: 77
McClellan Oscillator (neutral between -100 and 100): 144.55
Earnings Reports
Gap shares fall 13% after the retailer slashes profit guidance for the year. Macy’s stock surges as the company raises its 2022 profit outlook despite uncertain retail landscape. Alibaba’s stock rallied 14.79% following the earnings beat despite the company waiving its 2022 guidance, citing COVID-19 risks. Costco’s revenues topped estimates, but same-store sales missed expectations.
Noteworthy earnings reports for today:
What to trade today
The market seems to go up, but pay close attention to price when meeting its support or declining averages (if the case of course). The positive move can be a start of a reversal trend but also a short-covering / relief bounce / mean reversion. Check volumes to identify strong moves.
I do not see many good patterns with low-risk entries. I prefer to see the stocks setting up before pulling the trigger. No FOMO.
If trading, you may consider using smaller position(s).
Grid Dynamics ($GDYN) is consolidating above EMA21. If the prices go above the black line, the trade might work. Stop Loss: 5%.
Olin Corporation ($OLN) has a great base and tried to break resistance, but yesterday was not the best day for the sector. If the price makes another attempt to conquer the highs, we might see an advance. Stop Loss: 5%.
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.
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