Alex's daily Market update & Focuslist - 10/17
Powerful market bounce and close above June's low!
Good evening traders! 👋
What we’ll cover in the Newsletter tonight:
General market analysis ($NQ/$ES levels)
Market Breadth & Internals (Risk model)
Prime Model spreadsheet (PT_database) (NEW!)
Economic Calendar
Sectors Review
Alex’s TAKEAWAYS
Leaders list
Alex’s Portfolio update
LONG Focuslist
SHORT Focuslist (NEW!)
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Alex ✌️🛡️
GENERAL MARKET ANALYSIS ($NQ/$ES levels)
NASDAQ ($NQ) Daily
When I said that we had a good chance to see very volatile action, today was exactly that…a 3.6% upside move, which was mainly pre-market. This really smells the short covering rally, but it’s still a rally so we’ll make sure to profit from it if we can position ourselves with good risk/reward entries.
Today, $NQ closed above the 10dma and right above the 11068$ June low level, which was a very important level to breakout. It seems like the buying is pretty strong and we might see more upside moves with that double bottom & higher low today.
ST trend is UP, but we are still below Oct 13rd 11253$ pivot high so still in that range that I talked about last night. Until we close above that level, I will remain careful.
Let's be patient and let this market come to us. 🛡️
$NQ levels on the upside (resistance)
11253$ level (recent swing low)
11285$ level
the 21dma
$NQ levels on the downside (support)
10845/10890$ area (2020 structure / June low)
11068$ level (3 Oct. low)
10656$ level (2020 structure)
10484$ (Oct 13th low)
S&P500 ($ES) Daily
$ES levels on the upside (resistance)
3735/3780$ area
the 21dma
$ES levels on the downside (support)
3639$ last week swing low pivot
3596$ level (2020 structure)
3509$ level (2020 structure)
3388$ level (2020 structure)
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MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - big improvement again on the NNH @ -77 only. Tomorrow we could turn positive, which as not happened since last August…
20dma @ -476 (⬆️)
NYAD (Net Adv/Decl) - Now that’s the kind of thrust we want to see with a reading above 2000 @ 2118. Breadth confirming the move so far.
20dma @ -569(⬆️)
MCOSINYA (McClellan Oscillator) - McClellan turned positive and notice the last week or so action while we were making a new low on the indices, the McClellan oscillator made a HIGHER LOW and is now already in positive along the trend is up. This is very constructive.
20dma @ -153 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - LT breadth gapped up and closed above last Thursday's high and sitting right at the 50dma and 25.05$ pivot. Tomorrow could be a big breakout here. I want to see that to trust that rally.
MMFI (Stocks > 50dma - MT breadth) - MT breadth with a follow through and close above the 21dma.
MMTW (Stocks > 20dma - ST breadth) - ST breadth super strong with a breakout above recent 49.43$ structure. Very positive action here.
VIX (Volatility S&P 500)- VIX still trending down and retested the 32.31$ pivot to finally reject it and close just below the 10dma. We are going in the right direction and the intraday spike are very moderate.
DXY (US $) - This is probably one of the reasons why the market surged higher today along with other factors. You know that the correlation (inverse) has been very high between the US$ and the market recently, so a break to a new low and even at the 21dma like that certainly remove a lot of pressure on the market.
US10Y (US 10Y bond yield) - Now this is the BIG divergence I am seeing now and why I remain careful and see a potential risk in this market… the bond market is crashing and yields are going up, which is a headwind for the risk assets in general. Seeing the 10Y breaking out over the 4% level like that today is a red flag for me. The market didn’t seem to care today, but we’ll have to see if it starts to care soon…
IEI/HYG (Credit Spread) - This is very constructive for a potential bounce here…credit spread doesn’t indicate or give any clue on a potential rollover or market crash right now. No risk is being priced in with a break below the 50dma and the UTL.
BTC/USD (Bitcoin) - Bitcoin broke out of the 10/21dma today, on higher volume. This is very constructive and a first step in the right direction. Nothing is done here…
PRIME MODEL SPREADSHEET (PT_database) 🆕
Access to the PT_database 👇
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Sectors Relative Strength - Weekly (RS vs SPY)
Top 3: XLF - XBI - PEJ
(XLE) Energy - The energy sector is under pressure and the Crude commodity price is weighing on the whole sector today. We tried to reclaim the 82.07$ pivot but were not able to close above it. We are still above all kma’s and with an inside day.
(XLV) Health Care - XLV bounced from that stage 3 base area and closed above the DTL & right below the 50dma. We could see a potential breakout here tomorrow.
(PEJ) Leisure & Ent. - Big gap up, but did not really push intraday… still rejected at the DTL & 21dma.
(XLF) Financials - Financial with a gap up as well and close above the 21dma.
(XBI) Biotech - Nice action for XBI as we close above the 21dma, but still an inside day after crazy Friday’s move. I will look at the 81.75$ pivot to potentially play this sector with LABU 0.00%↑ (3x ETF). I also see a that WB setup playing out and a DTL breakout tomorrow would trig it.
Alex’s TAKEAWAYS
We are seeing constructive and powerful action off a very important level. That bounce creating a double bottom today is very positive…but we are still in the 13/14 Oct. range and indices moves are very large and there is a lot of volatility.
So I want to get engaged if we follow through and close out of that range, especially above that 21dma, but I will be building that exposure very incrementally at first. Progressive exposure will be super important.
LEADERS LIST
Overall leaders (PRIME Score)
WTI,HLIT,YPF,AEHR,PBF,DEN,PR,APDN,NOG,PAYO,MUR,DO,CVI,TALO,LNG,MTDR,VAL,WFRD,DINO,INSW,
Fundamental leaders (FA Score)
AMR,HCC,DK,MRO,ERF,DVAX,MGM,DRH,TELL,LBRT,BHF,ENLC,SWAV,TRGP,WTI,HLIT,MPC,FANG,KOS,ARCH,
Technical leaders (TA Score)
WTI,AEHR,YPF,APDN,HLIT,PBF,NTNX,DEN,PAYO,PR,RVNC,DO,NOG,CHRD,MUR,WFRD,VAL,LNG,CVI,CROX,
Relative Strength 1 Month (1M-RS)
PBF,CVI,PR,APDN,SVC,AMR,EGY,WTI,NEX,PSX,MTDR,NOG,OI,BTU,CCRN,PARR,ARCH,MARA,PAYO,PUMP,
Relative Strength 3 Month (3M-RS)
APDN,YPF,AEHR,NTNX,INSW,WFRD,TNK,WTI,RVNC,RXDX,FUBO,STEM,DEN,PR,ZETA,XMTR,CPRX,HLIT,PBF,AMRS,
Relative Strength 6 Month (6M-RS)
AEHR,INSW,TNK,STNG,TH,YPF,SWIR,MRSN,ARRY,APDN,HLIT,DCPH,WTI,PAYO,RXDX,CPRX,ELF,GERN,STKL,CELH,
PT PORTFOLIO UPDATE
LONG FOCUSLIST 📈
AEHR 17.3, DV 29.09, TH 12.98, CELH DTL, STEM DTL
AEHR 🎖️
Not the tightest action, but the way we retested the UTL, 50dma, and closed above Thursday's high showed incredible action again today. This is probably my top focus for tomorrow the way it acted recently.
Entry: recent swing high pivot @ 17.30$
DV
That 50dma bounce on Thursday was quite powerful, along with today’s base reclaim and close above all kma’s. I would use a recent swing high pivot to confirm a structure change.
Entry: recent swing high pivot @ 29.09$
TH 🎖️
A name that I traded last week but lost my position. I really like the RS it showed last Friday and the way we respected that base in the last few weeks. I would use the last intraday swing in the most recent consolidation to initiate a position.
Entry: recent swing high pivot @ 12.98$
CELH
A name that has an INCREDIBLE story and fundamentals that I will be looking to re-position. I like how we hold the end. of September low and I see last Friday as a U&R setup. I also see a wedge formed by the DTL which would confirm a trend shirft.
Entry: wedge DTL
STEM
A very strong name with good fundamentals that retested the stage 1 base in a 2-leg consolidation. I like how we held that base last Thursday and even made a higher low Friday. I will use the DTL to try and anticipate a breakout of that area reclaim and 50dma breakout. A lower probability play, but STEM proved that it could move pretty fast and be a leader.
Entry: wedge DTL
SHORT FOCUSLIST 📉🆕
PRVA 33.2, SBLK 18.95
PRVA
Stronger name recently after a pretty good run, but that break of the 50dma on VOLUME like it was nothing was very telling. We then retested 2 times the 50dma by making lower highs and just broke the recent wedge UTL last Friday.
UPDATE: Tried to reclaim that base area, but got rejected by it today, so the alert is still active.
Entry: recent swing low pivot @ 33.20$
SBLK
Shipping names as a whole are really weak and SBLK came to retest the base area & 50dma before rejecting it ON VOLUME and by breaking the UTL as well. This is a short to me if we break below that recent swing low pivot
Entry: recent swing low pivot @ 18.95$
INDICES trades (SQQQ/TQQQ)
That’s the kind of trade that is hard to plan & explain in advance. I share indices intraday setups & trades each day in the Discord channel if you’re interested to join. (7 days free trial, then 20$/m)
🎖️ = 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
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Great call AEHR!
Hello Alex,
For the AEHR setup, shouldn't the pivot be the high of the red candle, right after the black candle whose high you have marked as pivot? Why did you choose the high of the black candle as the pivot?
Merci!