Trading Plan: 7 November 2022
Nasdaq (+1.28%) gapped up in the morning, then the price undercut Thursday’s low and by the end of the day, it succeded to forming a green candle to close at the previous day's high. A real Roller Coster. The bottoming tail candle might suggest a rally to the declining EMA21 / SMA50. Watching Friday’s low and 10000 area for the downside as well.
SP-500 (+1.36%) gapped up, went down, reversed back and closed under the EMA21. All these moves are hard to trade because the implied volatility can kill all the profits. If the market really turns up, we might see the price above the SMA50 and test the 3900 level. Otherwise, watch the highlighted supports.
In the news
Retailers have a new holiday headache — people are spending their money on travel.
The U.S. economy adds 261,000 jobs in October as the labor market stays solid.
For Chip Makers, the Flip from Shortage to Glut Intensifies.
Sectors
Best yesterday sector: Basic Materials, then Financial. Worst sector: Healthcare.
Best weekly sector: Basic Materials, then Energy. Worst sector: Communication Services.
Best monthly sector: Energy, then Consumer Defensive. Worst sector: Communication Services.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 55.57
VIX (neutral under 20): 24.55
Put / Call Ratio (neutral between 0.7 and 1): 1.02
CNN Fear & Greed: 58 (Greed)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 58.82%
Stocks above SMA200 (neutral above 30): 36.25%
Number of stocks that increased yesterday by more than 4%: 475
Number of stocks that decreased yesterday by more than 4%: 285
McClellan Oscillator (neutral between -125 and 100): 99.96
Earnings Reports
Twilio TWLO 0.00%↑ shares crashed 35% after issuing weaker-than-expected guidance. Atlassian TEAM 0.00%↑ shares fell 29% after revenue missed expectations and the software maker issued a disappointing forecast. Cloudflare NET 0.00%↑ shares dropped 18% despite beating earnings and revenue expectations. Once again, forward guidance was key and clearly did not appease investors. Carvana CVNA 0.00%↑ shares suffered their worst day ever after it missed already lowered top and bottom-line expectations. DraftKings DKNG 0.00%↑ shares tumbled as investors jumped ship. Although its revenues beat expectations ($502 million vs. 437 million) and it raised its full-year guidance, its monthly users fell short of estimates. DraftKings said it had 1.6 million monthly unique paying customers in the quarter. While that’s 22% YoY growth, it fell well short of the 2 million analysts expected.
Noteworthy earnings reports for today:
Here are this week’s earnings:
What to trade today
All sectors closed in the green on Friday. Reversal or just a pressure relief? Nobody knows…
The labor market remains resilient as the demand is still high despite the Fed’s efforts. Judging by the hard-hit growth stocks, investors think the tightening will continue. Not the best environment to trade.
Top 20 Industry Groups:
I do not plan to trade. But, I will watch:
DCP Midstream DCP 0.00%↑ is consolidating nicely above the EMA21 and SMA50. A price above Friday's high offers a good low-risk entry since the Stop Loss can be set at Friday's low.
Aehr Test Systems AEHR 0.00%↑ made a mean reversion, a price above the black line might signal higher prices.
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: