Trading Plan: 9 September 2022
Nasdaq (+0.60%) continued higher with below-average volumes. The following watch point is the SMA50 / EMA21 area - we will see if the price has the power to pass them or if we have just a mean reversion and a downtrend continuation. Of course, keep an eye on the previous support.
SP-500 (+0.66%) also headed towards its main averages (SMA50 and EMA21). The same idea, watching the power of the recent trend: strong if the price can pass the mentioned averages or weak if the price will reverse back to the lows.
In the news
Fed Chair Powell vows to raise rates to fight inflation ‘until the job is done’.
The clean hydrogen energy economy could happen by 2030, thanks to the climate bill.
United Airlines raises bet on electric air taxis with 200 aircraft from upstart Eve.
Mortgage Rates Hit 5.89%, Highest Level Since 2008.
More people are dining out now than before the pandemic.
Sectors
Best yesterday sector: Healthcare, then Financial. Worst sector: Communication Services.
Best weekly sector: Healthcare, then Utilities. Worst sector: Energy.
Best monthly sector: Energy, then Utilities. Worst sector: Technology.
Sentiment
NAAIM (weekly, neutral between 70 and 90): 27.33
VIX (neutral under 20): 23.61
Equity Put / Call Ratio (neutral between 0.7 and 1): 0.97
CNN Fear & Greed: 42 (Fear)
Breadth
Stocks above SMA40 (neutral between 30 and 80): 38.01%
Stocks above SMA200 (neutral above 30): 28.24%
Number of stocks that increased yesterday by more than 4%: 319
Number of stocks that decreased yesterday by more than 4%: 105
McClellan Oscillator (neutral between -100 and 100): -60.14
Earnings Reports
It looks like expectations in DocuSign DOCU 0.00%↑ have finally gotten low enough for them to beat. The company just posted better-than-expected earnings, revenue, and billing data. Cloud security company Zscaler ZS 0.00%↑ also topped earnings, revenue, and billings estimates. Its adjusted EPS was $0.25 vs. $0.21 expected. Revenue was $318.1 million vs. the $305.4 million analysts expected. And billings were %520.4 million vs. the $467.2 million analysts forecasted.
Noteworthy earnings reports for today:
What to trade today
Market continued higher, but the test is near: will the price pass SMA50 / EMA21 and head to the SMA200? Or the price will be rejected and sent back to the lows?
Made a test buy yesterday: CEG 0.00%↑, but I will sell if the market is weak.
The watched list (see yesterday's Trading Plan) had a constructive day and we might see future development. Until then, you may consider using a smaller position size and a tighter stop than usual.
I do not see many low-risk entries now. I will watch: Digi International DGII 0.00%↑ - it consolidates nicely around the EMA21. I want to see above the black line. An early entry might be above yesterday's high as well. Stop Loss: 5% or EMA21.
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: