Trading Plan: 5 December 2022
Nasdaq (-0.18%) gapped down but closed at the highs. This bull flag with two-day consolidation is healthy and might signal a further advance. Watching the marked levels; a price above the recent resistance is constructive.
SP-500 (-0.12%) succeed in staying above the SMA200 which is a powerful price action. Seeing volumes coming in will be very bullish while rejection can send the price back to the lows. Be open and cautious at this type of inflection point. Watching the resistance and the EMA21 level.
In the news
EU Agrees To $60 Oil Price Cap.
Key inflation measure that the Fed follows rose 0.2% in October, less than expected.
Hong Kong stocks jump 3% as China relaxes some virus rules.
Oil prices rise after OPEC+ keeps output cut targets, China eases COVID curbs.
Manufacturing orders from China down 40% in unrelenting demand collapse.
Demand for remote jobs outpaces supply.
Sectors
Best yesterday sector: Basic Materials, then Consumer Defensive. Worst sector: Technology.
Best weekly sector: Consumer Cyclical, then Communication Services. Worst sector: Energy.
Best monthly sector: Basic Materials, then Communication Services. Worst sector: Energy.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 64.36
VIX (neutral under 20): 19.06
Put / Call Ratio (neutral between 0.7 and 1): 0.84
CNN Fear & Greed: 75 (Extreme Greed)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 73.68%
Stocks above SMA200 (neutral above 30): 49.31%
Number of stocks that increased yesterday by more than 4%: 307
Number of stocks that decreased yesterday by more than 4%: 96
McClellan Oscillator (neutral between -125 and 100): 63.45
Earnings Reports
Noteworthy earnings reports for today.
The most anticipated earnings releases scheduled for this week:
What to trade today
Market has good momentum and (new) leaders are emerging as more than 70% of stocks are above their SMA40. The cumulative 4-week new high-low display strength (see the below graph). Some indexes are back above the SMA200 (DJ-30. SP-500) + IWM, IWN and IWO. Volatility is where we want it (below 20 - of course, if below 15, the better).
So, are we out of the woods?! Hard to tell, let’s watch the stocks’ price action and let them guide us about increasing / decreasing exposure in the market.
Oils, Gas, Solar are still at their highs while many others begin getting more and more traction. Here are the Top 20 Industry Groups to keep an eye on:
As already stated above, there are many stocks making ATHs, but I do not chase them. I prefer finding low-risk opportunities with high rewards to taking high-risk bets.
These are my top stocks to watch now:
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: