Trading Plan: 19 May 2022

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Indexes
  1. In the news
  2. Sectors
  3. Sentiment
  4. Breadth
  5. Earnings Reports

Nasdaq (-4.73%) was not able to pass over Tuesday’s high. It seems that the FTD was in the “mean reversion” scenario. The yesterday bar is wide and there are many chances to see a downtrend continuation. Watching the next supports now.

SP-500 (-4.04%) made an even bolder down move in terms of volumes (higher volumes yesterday than the day before). Watching the 10800 level, the price might visit it. As a reminder, the index price is still under all the main averages, nothing magical is happening here.

In the news

Target, Walmart Earnings Selloff Puts Retailers’ Inflation Pains on Display.

Tesla was kicked out of the S&P 500′s ESG index.

Bitcoin production roars back in China despite Beijing’s ban on crypto mining.

Melvin Capital to Close Funds, Return Cash to Investors.

The euro is nearing parity with the dollar.

Sectors

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

Sentiment

  • NAAIM (weekly, neutral between 70 and 90): 24.31
  • VIX (neutral under 20): 30.96
  • Equity Put / Call Ratio (neutral between 0.7 and 1): 1.19
  • CNN Fear & Greed: 9 (Extreme Fear)

Breadth

  • Stocks above SMA40 (neutral between 30 and 80): 15.82%
  • Stocks above SMA200 (neutral above 30): 22.29%
  • Number of stocks that increased yesterday by more than 4%: 90
  • Number of stocks that decreased yesterday by more than 4%: 301
  • McClellan Oscillator (neutral between -100 and 100): -20.24

Earnings Reports

Target shares sink 25% after the company says high costs and inventory woes hit profits. Cisco stock plunges as the company forecast a surprising revenue decline. Bath & Body Works shares fall as the retailer cuts profit outlook due to inflation. Lowe’s sales decline as cool spring weather weighs on demand for outdoor products.

Kohl’s ($KSS) will report its first-quarter earnings ahead of the May 19 open. As for the retail stock’s first-quarter results, analysts, on average, expect earnings to arrive at 72 cents per share (-31.4% YoY) and revenue to land at $3.7 billion (-0.5% YoY).

Other noteworthy earnings reports for today:

What to trade today

When the inflation is hurting the consumers (as per Walmart and Target’s earnings and outlook) and the big guys ($MSFT, $AAPL, etc.) capitulate also, definitely the market is weak and we might see bad things in the near future.

And even if the FTD was weak, yesterday there was a chance for a rebound, but the opposite happened.

Yesterday ‘damage’ of the wide red bar needs days/weeks to be repaired. We need a strong base first.

There is no need to guess where the bottom is as we didn’t have at least a retest of the lows. If broken, we might see lower and lower prices.

Shorting is not easy after these huge red bars. We need some good low-risk entries, not

So… no plan to trade for today, just watching. Cash is king.

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.

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