Trading Plan: 3 October 2022
Nasdaq (-1.51%) closed at the June support with under-average volumes. Even if the price wanted higher, the closed was weak at the low of the day. A consolidation here might signal a downtrend continuation, but taking into account the extreme oversold condition, a bear rally is also possible.
SP-500 (-1.51%) closed with higher volumes below the June support after the price failed to go higher. This distribution day in this index might signal a downtrend continuation to the next possible old support. It is said the price has memory (the longer the weaker), but no predictions.
In the news
Stocks and bonds are ‘discounting for a disaster after the worst stretch for investors in 20 years.
Elon Musk Unveils Prototype of Tesla’s Humanoid Robot Optimus, Says It Will Cost Less Than a Car.
Tesla's logistical challenges overshadow record deliveries.
Toyota CEO doubles down on EV strategy amid criticism it’s not moving fast enough.
Opec+ plans substantial oil production cuts to prop up prices.
Sectors
Best yesterday sector: Real Estate, then Basic Materials. Worst sector: Technology.
Best weekly sector: Energy, then Basic Materials. Worst sector: Utilities.
Best monthly sector: Healthcare, then Consumer Defensive. Worst sector: Real Estate.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 12.61
VIX (neutral under 20): 31.62
Equity Put / Call Ratio (neutral between 0.7 and 1): 1.12
CNN Fear & Greed: 15 (Extreme Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 12.93%
Stocks above SMA200 (neutral above 30): 17.85%
Number of stocks that increased yesterday by more than 4%: 206
Number of stocks that decreased yesterday by more than 4%: 202
McClellan Oscillator (neutral between -100 and 100): -144.45
Earnings Reports
CCL 0.00%↑ shares sink after Carnival warns of “storm ahead”.
No noteworthy earnings reports for today.
This week's earnings:
What to trade today
Nothing changed from last week's approach. Some stocks are holding and even though there are some that show a nice long pattern, the overall environment is a big red light indicator.
Solar, Oils, Bio still in the top list and holding well.
Top 20 Industry Groups:
I will watch:
Karuna Therapeutics KRTX 0.00%↑ shows a controlled retracement with low volumes and ATR. If the market reverse, the price might be igniting above the black line.
Napco Security NSSC 0.00%↑ is above all main averages and consolidates at EMA21.
International Seaways INSW 0.00%↑ is trending up (EMA21>SMA50>SMA200) and stays nicely above the EMA21.
If taking a new long is risky, taking a short is also risky. I know, nothing new, but these market conditions seem extreme. A bear market rally or going more oversold from oversold conditions are equally possible.
Amazon is one of the juiciest candidates for a short:
I do not plan to trade. But if you decide to trade, consider using a smaller position and tightening stops.
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: