Trading Plan: 7 February 2022
Even if Nasdaq (+1.58%) advanced on Friday, the volume was not strong and this tells me that we need to be very careful when trading during this time. A short rally is possible towards the SMA200, but it needs a big volume to pass it. Very difficult to say whether the new rates we might see in March are discounted yet or not. Better to wait for a confirmation.
SP-500 also closed in green (+0.52%) and stays above the SMA200. The market is very volatile and it seems the investors and traders are dancing by the earnings music. Apple pulls the market up, Facebook disappoints and drags it back, and then Amazon lifts the sinking ships again… The closing candle was a Doji, another sign of indecision. Very possible to test the lows again and form a double (or even a triple) bottom pattern.
Amazon ascended 13.54% on Friday, carrying the market alongside it.
Ford shares slid (-9.15%) after it reported fourth-quarter earnings Thursday that significantly missed Wall Street’s earnings expectations and slightly missed on revenue.
Bitcoin rose above its 50-day moving average for the first time in more than two months.
Sectors
Best yesterday sector: Consumer Cyclical, then Energy. Worst sector: Consumer Defensive.
Best weekly sector: Consumer Cyclical, then Energy. Worst sector: Real Estate.
Best monthly sector: Energy, then Financial. Worst sector: Consumer Cyclical.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 62.54
VIX (neutral under 20): 23.22
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.95
CNN Fear & Greed: 35 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 25.74%
Stocks above SMA200 (neutral above 30): 28.51%
Number of stocks that increased yesterday by more than 4%: 404
Number of stocks that decreased yesterday by more than 4%: 73
Noteworthy Earnings Reports / Events for today
What to trade today
Crypto-related stocks made a beautiful turn, it is possible to continue the reversal. Coinbase ($COIN) can be traded above the black line and with Stop Loss at Friday low. If advances and stays above the EMA 21 it will be a good sign.
Sea Limited ($SE) made higher lows and stays very well above the lows. The same idea, if it passes the black line can be traded with Stop Loss at 7%. It will be a good sign if it closes above the EMA21.
Tesla ($TSLA) was upgraded again and it shows a bottoming pattern. A possible entry is at Friday high with Stop Loss at Friday low.
Cloudflare ($NET) consolidates above the EMA21. It may be traded above the Friday high with Stop Loss at Friday low.
Zscaler ($ZS) is a cloud security company and a leader in zero trust, a pattern similar to $NET. Entry above the black line with Stop Loss at $252.
Everspin Technologies can break out if the market is strong. Notice the volumes in the last months, there are no big sellers during this time, this is a very bullish sign. I will watch it above the black line and Stop Loss at Friday low.
Atlassian ($TEAM) is a very good company and the pattern might indicate a desire to go up. Entry above the black line with Stop Loss at EMA21.
Dutch Bros ($BROS) might offer a second entry. You may consider adding to this position.
This is not a time to be aggressive at all in the market, please consider lower position sizes.
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.