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What we’ll cover in the Newsletter tonight:
General market analysis ($NQ/$ES levels)
Market Breadth & Internals (Risk model)
Prime Model spreadsheet (PT_database)
Economic Calendar
Sectors Review
Alex’s TAKEAWAYS (+Gameplan)
Leaders list
Alex’s Portfolio update
LONG Focuslist
SHORT Focuslist
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Alex ✌️🛡️
GENERAL MARKET ANALYSIS ($NQ/$ES levels)
Starting tonight, I will be using S&P 500 (ES_F) as my benchmark for my market analysis, exposure model reference, etc. In the last few weeks, Nasdaq has been lagging considerably over S&P and that’s why I want to follow the leading indices for decision-making.
S&P500 ($ES) Daily
Today, we reclaimed the 3855$ level and broke above the 50dma on the BoC (Bank of Canada) raising rates “only” 0.5% instead of the 0.75% expected. That news created a possible anticipation that the FED would do the same next week and the market rallied hard on it.
Later this afternoon, came the prelim GDP Q3 numbers than came stronger than expected, and the market sold off hard on that news might indicate that the FED could continue pressing the pedal on rate hikes.
Crazy day right…?!
Tomorrow, I want to see ES reclaim the 3855$ level and ideally close ABOVE the 50dma. If not, I want to see the 3820$ or at least the 3780$ level hold in case of a pullback or rollover tomorrow.
$ES levels on the upside (resistance)
3855/3903$ area (May/June/July structure)
the 50dma
$ES levels on the downside (support)
3820$ level (Oct. structure high)
3780$/3735$ area
3639$ last week swing low pivot
3596$ level (2020 structure)
3509$ level (2020 structure)
3388$ level (2020 structure)
NASDAQ ($NQ) Daily
$NQ levels on the upside (resistance)
11534$ level (Sept. structure)
11689/11794$ area (May/June/July structure)
the 50dma
$NQ levels on the downside (support)
11253$ level (recent swing low)
11068$ level (3 Oct. low)
10845/10890$ area (2020 structure / June low)
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - small improvement here as we are near equal between highs/lows @ -15.
20dma @ -315 (⬆️)
NYAD (Net Adv/Decl) - Breadth came down today, along with the trend switching as well. We are still positive, but with a negative trend.
20dma @ -17 (⬇️)
MCOSINYA (McClellan Oscillator) - McClellan continued higher today and the trend is almost positive. Going in the right direction.
20dma @ -12 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - LT breadth reversed at the 34.16% previous structure high level I pointed out last night. This could be a reversal area, or at least a pause to let kma’s catch up a bit.
MMFI (Stocks > 50dma - MT breadth) - MT breadth with a similar reversal right into the 50% resistance area. Also could be a reversal or pause.
MMTW (Stocks > 20dma - ST breadth) - ST breadth now tested an historical high of 85% today and got rejected. This is normally where we see a reversal or at least a pause and grind higher. We’ll have to be very careful in the following days because we are ST extended right now.
Keep in mind that it’s the style of ST overbought condition rally that we can see. All that move after July 27th was with MMTW > 70%. So an overbought condition here doesn’t mean we crash the following day.
VIX (Volatility S&P 500)- VIX continues to tell the story of that rally. Another huge drop with a recent structure area & 50dma breakdown. We are going in the right direction and even ST extended from the 10/21dma here as well.
DXY (US $) - Another huge move today for the US$ (even bigger than yesterday) and yet the market did not respond as strong as yesterday…I see a possible bearish divergence here.
US10Y/TNX (US 10Y bond yield) - The 10Y also continues its trend down and now undercut the 10dma today and getting right back at the 4% base level. Will watch for a possible reversal at these levels.
IEI/HYG (Credit Spread) - Tried to gap up, but closed lower. good.
BTC/USD (Bitcoin) - Bitcoin continues to bounce with another big 3%+ move today and a breakout above the 20381$ level I was watching closely last night. I see a potential area of resistance around 21700$.
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Sectors Relative Strength - Weekly (RS vs SPY)
Top 3: XME - TAN - ITB
(XLE) Energy - The energy sector continues to trend higher and made a new high today. Clearly, as Crude Oil (CL_F) confirms the bottoming action, this trend might continue with possible pauses along.
(XME) Metals & Mining - XME with a reversal day following a gap up, on volume. Not the type of action I like to see.
(XBI) Biotech - Broke out of the 81.75$ base level and the 50dma, but got rejected and close below it. That’s a big reversal bar…
(SMH) Semiconductors - Tried to breakout off that base, but got rejected and was not able to close above it. That’s not a good bar, but still within the area and above the 21dma.
(XLF) Financials - Also reversal bar just follows the base breakout. Not a huge red flag but could mean due for a pause.
(FDN) Internet - Nasty action here…a big gap down, reclaimed the 50dma only to be slammed down and closed at the open. Big reversal bar on volume and a 50dma rejection. Not looking good at all.
(IGV) Software - Nasty action here as well… a big gap down, reclaimed the 50dma only to be slammed down and closed at the open. Big reversal bar on volume and a 50dma rejection. Not looking good at all.
Alex’s TAKEAWAYS
I’ve got such a mixed bag of signals tonight…
What I like:
Individual stocks are working well in the Energy/Materials sectors
Breadth is improving with broadening participation
DXY & 10Y trend lower / selloff continues, helping the equity market
The VIX is in a solid downtrend and is now below the 50dma.
What I don’t like:
A lot of reversal in individual names today at key levels or extended after the recent rally
Sectors showing the same reversals today, especially in these tech & growth-related areas.
ST breadth indicators begin to flash overbought condition
We just had a double 50dma rejection on ES.
Almost no long setups tonight, even have more short setups in the FL.
I tend to think that we might be ST extended and due for at least a pause or PB. Will it be tomorrow, IDK! but the 50dma seems to be pretty given hard time to this market…
Gameplan:
Tomorrow, if we gap up & run at the open, I will use that strength to trim a couple of positions to get at least around 20% long exposure or below. I don’t plan to add any long exposure going into FED next week. I might open 1-2 short positions tomorrow to play a potential 50dma rejection on ES.
LEADERS LIST
Overall leaders (PRIME Score)
WTI,HLIT,YPF,PR,CVI,ERF,SWAV,PBF,MUR,XMTR,CCRN,AEHR,DVN,DEN,FANG,MRO,DO,PARR,XPRO,WFRD,
Fundamental leaders (FA Score)
RES,AMR,HCC,MRO,ERF,DVAX,MGM,DRH,TELL,BHF,ENLC,SWAV,TRGP,WTI,HLIT,DK,MPC,FANG,KOS,ARCH,
Technical leaders (TA Score)
YPF,WTI,PARR,WFRD,HLIT,AEHR,PR,XPRO,CHX,CVI,MUR,SLB,CCRN,XMTR,PBF,DO,NOV,DVN,PAYO,STKL,
Relative Strength 1 Month (1M-RS)
CHX,CAR,PR,XPRO,PARR,MARA,RES,HAL,NOV,SLB,ESTE,WTI,CPE,MTDR,MUR,DO,APA,PUMP,TLRY,TALO,
Relative Strength 3 Month (3M-RS)
APDN,YPF,WFRD,AEHR,NTNX,INSW,WTI,XMTR,XPRO,STEM,PR,TNK,RVNC,CAR,FUBO,DEN,ZETA,PARR,MUR,HLIT,
Relative Strength 6 Month (6M-RS)
AEHR,ARRY,YPF,STKL,STNG,TNK,INSW,CCRN,MRSN,RXDX,SWIR,HLIT,STEM,SWAV,CPRX,PAYO,TH,CVI,XMTR,RXRX,
PT PORTFOLIO UPDATE
Intraday/Closed trades:
LONG FOCUSLIST 📈
DINO 61.11,
DINO
Oil name setting up a perfect BORS setup with the 58.64$ earlier entry pivot retest. I like how we just broke out of the ST DTL with a higher-than-average volume. Leading sector.
UPDATE: The energy sector is still strong, but DINO still never triggered its entry pivot.
Entry: recent swing HIGH pivot @ 61.11$
SHORT FOCUSLIST 📉
PAGS 13.13, SNOW 166.72, GTLB 46.39, GNK 13.39, SBLK 18.53,
PAGS🎖️
I see the UTL that we broke last week, only to come to recent the previous swing high and also the 50dma which we rejected again today…on volume.
Entry: recent swing LOW pivot @ 13.13$
SNOW
This software name was showing potential for a long setup with the DTL potential breakout, but now we rejected this level hard today and closed below all kma’s. IGV sector is also super weak and rejected at the 50dma. Might have the sector help here on this one.
Entry: recent swing LOW pivot @ 166.72$
GTLB
A name that I traded a few months back now showing weakness with yet another DTL rejection and close below all kma’s. We are clearly in a downtrend, and if we break below the 46.39 level, that would negate the base reclaim and would set it for a potential break lower and another shot at the longer-term UTL.
Entry: recent swing LOW pivot @ 61.11$
GNK🎖️
Shippers as a group are very weak and showing 50dma rejection with lower highs. We are right at the UTL that could try the early entry tomorrow or use the recent swing low pivot for more confirmation. Also second rejection on volume today.
Entry: recent swing LOW pivot @ 13.39$ OR DTL
SBLK
Another shipper name that got rejected and building lower highs at the 21dma. Would use a recent swing low for a possible entry.
Entry: recent swing LOW pivot @ 18.53$
🎖️ = Alex’s highest conviction setups
NOTE: I have the discipline to build a detailed FocusList each night, but I want to emphasize that I DON’T take all the trades that would trigger their entry. Some reasons to take a specific position over another, or not take any trade even if the alert is activated, are:
The general market price action
My Market-Based exposure model
My Portfolio-based exposure model (progressive exposure)
A high-conviction setup
Price action around the entry pivot
Then even if I take a trade at the entry pivot, I will very often sell it right away if the market roll over or the stock is backing out of the gate. I prefer to re-enter on the entry pivot reclaim than to be stuck with a larger loss. Please study closely all my education articles to learn how I handle trades around these entry pivots.
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REFERENCES
Articles on the system:
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