Trading Plan: 14 October 2022

Nasdaq (+2.23%) gapped down in the morning, but during the day it snapped back from the 10.000 psychological level and was able to close above all the last three candles. Does this powerful move signal a new trend or just a bear really? Hard to tell. Just keep on watching the price action and keep an eye on the marked levels.

$NASDAQ(.IXIC)$

SP-500 (+2.60%) has the same price action and closed the day with a green wide bar as well. It will be better to have a base here and to have one or two tests of this new support area. But, market doesn’t care about our thoughts and it will do whatever it needs to do. Watching the marked levels.  $S&P 500(.SPX)$

In the news

Inflation increased 0.4% in September, more than expected despite rate hikes.

Bond Yields End Higher After Wild Session, Lifted By Inflation Data.

Saudi Arabia, United States clash over the reason for the OPEC+ oil cut.

Apple partners with Goldman Sachs to introduce high-yield savings accounts for Apple Card holders. $Apple(AAPL)$

Mark Zuckerberg said he missed a giant shift in social networking.

Elon Musk is under federal investigations, Twitter says in court filing.

Sectors

• Best yesterday sector: Energy, then Financial. Worst sector: Consumer Cyclical.
• Best weekly sector: Consumer Defensive, then Energy. Worst sector: Technology.
• Best monthly sector: Energy, then Healthcare. Worst sector: Utilities.

Sentiment

• NAAIM (weekly, neutral between 70 and 90): 19.84
• VIX (neutral under 20): 31.94
• Equity Put / Call Ratio (neutral between 0.7 and 1): 0.90
• CNN Fear & Greed: 24 (Extreme Fear)

Breadth

• Stocks above SMA40 (neutral between 30 and 80): 28.51%
• Stocks above SMA200 (neutral above 30): 24.88%
• Number of stocks that increased yesterday by more than 4%: 681
• Number of stocks that decreased yesterday by more than 4%: 110
• McClellan Oscillator (neutral between -100 and 100): 20.01

Earnings Reports

Big bank earnings unofficially mark the start of the new earnings season, and all eyes will be on JPMorgan ChaseJPM 6.99%↑when it unveils its third-quarter results ahead of Friday’s open. Consensus estimates are for JPM to report earnings of $2.91 per share (-22.2% YoY) and revenue of $32.1 billion (+7.8% YoY).

Other noteworthy earnings reports for today:

What to trade today

From agony to ecstasy. This is the title for yesterday’s price action.

I saw many short sellers being euphoric about the “obvious” gap down in the morning as per the released inflation data. And I saw many buyers being euphoric about the “obvious” reversal during the second part of the day as per the “bottom-is-in” approach. For me, as a trend-following trader, there was nothing obvious besides that huge volatility can be a real killer of your profits.

The volumes for the big bars in both indexes were not great, just a little higher for Nasdaq (index, not the QQQ ETF!) and even lower for SP-500 (again index, not SPY ETF). Another sign to be still cautious.

I like Ionis PharmaceuticalsIONS 0.91%↑, nice price action, the price stays on the EMA21, low volumes and declining ATR. If the market remains positive, a trade above the black line might work. Stop Loss: SMA50.  $Ionis Pharmaceuticals(IONS)$

I also like HF Sinclair Corporation DINO 4.69%↑: the price is at the Green Line Breakout. Stop Loss: 4–5% max. $HF Sinclair Corporation(DINO)$

If trading, you may consider using a smaller position size and tighter stops. We saw yesterday the transition from agony to ecstasy. We never know if the price will stay in the positive territory or go back to… agony.

Risk first.

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