Trading Plan: 20 October 2022

Nasdaq (-0.85%) gapped down and closed the day forming a Doji candle. This might suggest indecision… towards the bearish side. After another distribution day, we can only observe the price action and keep looking for clues: above Tuesday’s high or yesterday’s low. Watching the marked levels as well. $NASDAQ(.IXIC)$

SP-500 (-0.67%) closed below EMA21 and the price seems it wants to be both in a bullish pattern (bull flag) and can ignite above Tuesday’s high or we have just an ordinary EMA21 visit (mean reversion) and the downtrend will continue. $S&P 500(.SPX)$

In the news

Biden administration awards $2.8 billion in grants for electric vehicle battery manufacturing.

Mortgage demand drops to a 25-year low, as interest rates climb.

Markets and economists are increasingly certain of recession.

US government seeks court injunctions against six e-cigarette manufacturers as FDA steps up enforcement.

Sectors

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

Sentiment

NAAIM (weekly, neutral between 70 and 90): 19.84
VIX (neutral under 20): 30.76
Put / Call Ratio (neutral between 0.7 and 1): 1.02
CNN Fear & Greed: 34 (Fear)

Breadth

Stocks above SMA40 (neutral between 30 and 80): 33.74%
Stocks above SMA200 (neutral above 30): 26.18%
Number of stocks that increased yesterday by more than 4%: 126
Number of stocks that decreased yesterday by more than 4%: 479
McClellan Oscillator (neutral between -100 and 100): 54.25

Earnings Reports

Tesla reported $1.05 in adjusted EPS, ahead of expectations of 99 cents, on revenues of $21.45 billion, lighter than the $21.96 billion expected. IBM surpasses quarterly projections and lifts its full-year revenue forecast. Procter & Gamble’s earnings beat as higher pricing offsets the drop in volume. Globally critical chip firm ASML jumps 6% after earnings. $Tesla Motors(TSLA)$ $IBM(IBM)$ $ASML Holding NV(ASML)$

Noteworthy earnings reports for today:

What to trade today

Except for Energy, all sectors closed in red yesterday. I liked the price action of a few individual stocks in the mentioned sector and we probably see them higher and higher.

After two “optimistic” days, the market is back under pressure. The risk is still high.

I will watch the Energy sector and I will keep an eye on $VIST, $MUR, $DVN, $COP, $TPL, $LNG, $CEG, $MCP or $DCP.

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