Alex's daily Market update & Focuslist - 02/05
Friday's reversal - Pullback day #1?
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Alex ✌️🙏
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Price Action Analysis:
ES_F tried to rally at the open Friday with a lot of strength after a gap down, only to find quickly selling pressure through the day. We finally closed just above 4137$ level, within our important resistance area.
We now have a second high (Friday’s high) for a potential pullback mini-channel DTL. It will be important to see how the market and the stocks are handled in the next few days to see signs of strength and support at this critical time for the market.
We are in a very strong uptrend, above all kma’s, yet we are pretty extended (indices/stocks/breadth) and are at a key resistance area. So yes, I expect a pullback, like I said last week, but the big question is whether this pullback is healthy.
On the upside,
I’ll watch 4180$ and 4212$ levels as important potential resistance levels. We also have our potential mini-channel developing, so I’ll also watch for that DTL on the upside.
On the downside,
I’ll want to see at least 4109$ level & 10dma show support. Below that, it could indicate a deeper move in the books.
If we push below, 4082/4056$ area and the 21dma would be the next target.
NASDAQ (NQ_F) Daily
RUSSELL 2K (RTY_F) Daily
In the following sections of tonight’s letter, I’ll cover essential parts of my daily routine & preparation for tomorrow’s trading session.
✅ My overall current market Takeaways & GAMEPLAN for tomorrow
✅ PRIME_LIST (potential TML’s)
✅ My daily Focuslist, including setups, alert levels & explanation (LONG/SHORT)
✅ My Portfolio update
✅ Sectors Review
✅ Market Breadth & Internals
✅ Economic Calendar
✅ Prime Model spreadsheet (PT_database)
✅ Leaders list (technicals, fundamentals & potential TMLs)
Alex’s TAKEAWAYS
At this point, all the internals remains strong, and we’ll have to see how healthy we are pulling back to assess the strength of this current uptrend.
NQ_F 8.8% above the 50dma. We cooled off a bit but still very extended.
McClellan's summation index is ABOVE post-covid rally high and soon approaching the 2019 rally’s high, that’s very extended.
Major indices are all at important resistance areas.
NQ_F: 12578/12801$ area
ES_F: 4137/4212$ area
RTY_F: 2030/2054$ area (approaching)
Stocks above 20 + 50dma are at overbought levels, and we made a negative divergence again on Friday.
The intermediate term is bright, and I think this rally might be the start of something more, but the market will not move in a straight line. This could also be another technical rally in this bear market, and we don’t know…so it’s very important to bend with the trend and follow price action.
Market health & Trend indicators:
LT_SIGNAL: uptrend (black) + ABOVE 50dma = INTERMEDIATE-TERM UPTREND (🟩)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = SHORT-TERM UPTREND (🟩)
Tomorrow's economic news/events:
GAME PLAN:
Now that we confirmed reversal day #1 on Friday, I will manage my exposure, but I don’t plan to add any more long exposure until we find support and breakout from that DTL I’m watching on ES_F.
It’s time to be careful, folks, as we don’t know how far this reversal will lead us or IF this pullback will be healthy. Please wait for confirmation to be aggressive, we have too much uncertainty right now.
EXPOSURE MODEL:
PRIME_LIST (potential TMLs)
AEHR ALGM FOUR ELF LSCC BAND
AEHR: We really tried to breakout on Friday, but then the market & sector weakness hit, and we closed near the lows. We are still above all kma’s, but this failed breakout could be a potential reversal going into this week.
BAND: Very powerful move Friday, especially considering the market weakness. We reclaimed the 26.74$ base high level and closed above it. Very constructive.
FOUR: Opened VERY weak Friday morning, but we managed to find support at the UTL & 10dma. We reclaimed the 65.79$ base high level and closed above it. For me, this is a BORS setup playing out.
LSCC: Failed new high and nasty reversal. I will be looking to see if we can find support at the 10dma and 77.16$ prior base high pivot. Earnings are in 1 week, so clearly, no time to initiate a trade, only in observation mode.
ALGM: Beast. gap down again then pushed to a new high—huge RS considering the market & SMH sector weakness. Institutions can’t get enough, which is a good sign for the future of this name. Still waiting for a PB to add to my position.
ELF: They reported earnings last Thursday, and we gapped up +15% on the day. Friday, we made a new high and closed mid-range. The fundamental numbers are outstanding, and we’ll have to monitor this name closely for a proper entry.
FOCUSLIST (LONG)
FOUR 67.62, INSW 40.55,
FOUR - Alert: 67.62, SL: 62.74
See PRIME_LIST—Friday’s candle high & DTL breakout to confirm the BORS setup. You can also use Thursday’s high pivot for additional confirmation.
INSW - Alert: 40.55, SL: 38.46
Shipping/Transportation names have been really strong last week, and INSW is shaping up great. There was a larger channel breakout 2w ago, then tight consolidation at tightening kma’s, and finally a 50dma & base breakout on Friday. Friday’s high pivot as an entry.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES (Included in Discord membership):
SECTORS PERFORMANCE
Leading sectors:
(SMH) Semiconductors - We gapped down, couldn't make a new high, and closed near the open. That reversal was on low volume, so tomorrow should give us more information if we reject that 246.76/257$ area or find support at 246$ level.
(TAN) Solar - Follow through on the failed 83.10$ base level breakout as we gapped down to the 10/21dma area. We are still above the 50dma.
(XBI) Biotech - We gapped down, couldn't make a new high, and closed near the open. That reversal was on low volume, so tomorrow should also give us more information here.
(XLE) Energy - Tried to reclaim the 50dma but got rejected and closed at the lows. This is a nasty candle…
(XME) Metals & Mining - Failed new high breakout at the 59.22$ level. Nasty candle on high volume, but still above all kma’s.
(XRT) Retail - We gapped down, couldn't make a new high, and closed near the open. That reversal was on low volume, so tomorrow should also give us more information here. We were so extended, above all kma’s…a pause or PB here is just normal.
(IGV) Software - We gapped down, retested the 293.41$ major resistance area bottom level, then closed near the lows… We were so extended, above all kma’s…a pause or PB here is just normal.
MARKET BREADTH & INTERNALS
$NYHL (Cumulative new 52W Highs/Lows & 50dma)
Yes, I changed the signal's name to INTERMEDIATE UPDTREND instead of a new bull emerging. I thought it was premature talking about a new bull market, so intermediate term better represents the signal IMO.
LT_SIGNAL: uptrend (black) + ABOVE 50dma = INTERMEDIATE-TERM UPTREND (🟩)
!MCSUMNYA (McClellan summation index & 10dma)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = SHORT-TERM UPTREND (🟩)
$NYMOT (McClellan Oscillator - Breadth extensions)
Big reversal on Friday, but did not make a new low.
NYHL (New 52W Highs/Lows) - NNH pulling back to 117.
NYAD (Net Adv/Decl) - Decline thrusts are increasing. Look at how the last five down thrusts are getting bigger & bigger. I am not sure what to conclude about this action, but clearly, each reversal in the market is getting stronger & stronger, so I would go for the not-so-good scenario, but it remains to be seen.
$NYA200R (Stocks > 200dma - LT breadth) - We retraced on Friday. We’ll need to watch if we follow through.
$NYA50R (Stocks > 50dma - MT breadth) - Red day again.
$NYA20R (Stocks > 20dma - ST breadth) - Red day again.
VIX (Volatility S&P 500) - We tried to reclaim the 10dma and important base area, but we got rejected and closed below 18.67$ level.
DXY/TNX (US$) - Big bounce continued on Friday, and it certainly helped to put pressure on the market. I’ll be watching closely how we react at the 103.58 & 50dma retest tomorrow or coming days. Do we reject it?
Credit Spreads (IEI/HYG) - We are still below the LT wedge UTL but returned to retest it on Friday. Will we confirm a short BORS and head back down, or was it a shakeout, and we’ll rally up from here? Stay tuned.
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
AEHR,ALGM,NINE,TGTX,OII,FOUR,ELF,LSCC,BAND,JXN,CENX,MNDY,RPD,PATH,DKNG,BLDR,YPF,TOL,ATI,FTAI,
Fundamental leaders (FA Score)
ENPH,FRO,ALB,NOG,CALM,ELF,TRIP,LTHM,ESTE,GFS,EURN,RUN,PR,JXN,CPRX,SPLK,LNTH,ALGM,AEHR,CPE,
Technical leaders (TA Score)
TGTX,AEHR,ALGM,OII,NINE,BAND,CENX,RPD,MNDY,FOUR,LSCC,PATH,ELF,JXN,BLDR,ATI,YPF,DKNG,TOL,FTAI,
Relative Strength 1 Month (1M-RS)
LCID,AEHR,TGTX,BTTR,CHPT,MELI,DKNG,ALGM,ABNB,CNK,SG,HCP,MRVL,PAGS,MP,CCL,PATH,ALB,LTHM,HOOD,
Relative Strength 3 Month (3M-RS)
TGTX,NINE,AEHR,RPD,MNDY,FOUR,BAND,ALGM,PATH,DOCS,FLYW,LSCC,OII,CENX,DKNG,AGNC,WMG,SPLK,BLDR,ELF,
Relative Strength 6 Month (6M-RS)
NINE,TGTX,YPF,AEHR,OII,ELF,JXN,FOUR,ALGM,BAND,RCL,GPS,WNC,PRTA,PARR,CENX,ATI,INSW,VAL,PR,
REFERENCES
Articles on the system:
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Thanks Alex. When you add to a position eg.AEHR, is there a % you follow? Ex. Initial is x, then the add is .5x or something like that.