Alex's daily Market update & Focuslist - 11/28
Things changes quickly...the end of this bear market rally?
Good evening folks!
That start of the week was not ideal. Let’s see if we see the start of a bear market rollover or a healthy pullback.
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Alex ✌️
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Today, we first opened with a gap down just above the 4016$ base level amid last night's China lockdown protest news. We could never hold that level and open around the middle of that base area this morning. We finally broke that UTL and retested it intraday before closing the day near the 3964$ base bottom level, which was my rollover/bear case scenario trigger. We also closed below the 10dma.
This PB could be the retest of the mini-channel DTL & 3964$ base level…or it can be the start of the end of this bear market rally. Which one it is? I don’t know, and we’ll let price push us in the good direction.
We have a packed week filled with important economic news daily so you can expect a volatile week.
On the upside, I want to see a reclaim of the 4016$ level to re-confirm the bullish scenario to me.
On the downside, I want to see 3964$ hold, but if we don’t, I would like to see the 21dma act as support again. Again, that 3964$ level HAS to hold if we want to keep the ST uptrend alive. Otherwise, I would consider a rollover or at least a more important PB.
NASDAQ (NQ_F) Daily
RUSSELL 2K (RTY_F) Daily
In the following sections of tonight’s letter, I’ll cover important parts of my daily routine & preparation for tomorrow’s trading session.
✅ My takeaways, including my trading gameplan for tomorrow
✅ My Portfolio update
✅ My daily Focuslist, including setups, alert levels & explanation
✅ Sectors Review
✅ Market Breadth & Internals
✅ Economic Calendar
✅ Prime Model spreadsheet (PT_database)
✅ Leaders list (technicals, fundamentals & potential TMLs)
Make sure to subscribe!
Alex’s TAKEAWAYS
Things change quickly… and we have to react & adapt.
We were building constructive bases in leading sectors, breadth was very strong & improving, leading names were strong, etc. We saw cracks in all of those today.
I am not ready to throw the towel and call this bear market rally over yet, but we MIGHT have seen day 1 of it if we follow through in the next few days. Certainly, I had enough signals to play the short side in anticipation of it but with tight risk management.
We have Jerome Powell speaking on Wednesday, so we MIGHT have volatile & choppy action tomorrow as the market wait for the important head of the FED speech to pick a direction.
Some observations:
The VIX gapped up in the recent resistance area & 10dma and could not reject either of those and closed strong.
DXY & the 10Y have bounced from key levels.
XLE, SMH, and TAN (leading sectors) broke neckline UTL with a lower high structure.
Other sectors on the watch also look bad: XBI, IGV, XLV, etc.
Breadth: Stocks > 200 broke below Aug. high pivot & >20 broke down the wedge it was building
NNH & A/D were not disastrous but were weaker
More importantly, we got positions & leading names such as CPRX, AEHR, ENPH, BTU, etc., making reversal & false breakouts near their highs.
As you see, many things that were looking good yesterday have started showing cracks & weaknesses. But we’ll need more confirmation before calling this rally as being over.
Gameplan:
With Jerome Powell's speech on Wed., tomorrow MIGHT be hard to trade. I only plan to manage my short positions and maybe add back my trims if we bounce at the open and offer a great R/R short entry. But overall, I won’t be too aggressive and certainly not open to any long exposure.
We have to respect that potential rollover, but at the same time can’t play it too aggressively, IMO, as we are still in an ST uptrend, and JPoww is speaking on Wed.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
LONG FOCUSLIST
PCG 15.43, ZETA 8.56,
PCG
Still basing after the initial 25% leg. We are contracting in both price & volume, and we just reclaimed the 15.03$ level after retesting the area & the 10dma on Wed. I like how this setup could also be seen as a WBPB following the recent wedge breakout and the CLEAR VCP (Volatility contraction pattern) characteristics.
UPDATE: Gapped down, but was bought well at the base area & 10dma.
ALERT: 15.43$
STOP LOSS: 14.96$ / LOD
ZETA
Strong software name that I have been following for a while. We retested the stage 1 base and broke that recent channel DTL. We retested it today along the 21dma. If the market really bounce and is good tomorrow, this might be a potential play on the long side.
ALERT: 8.56$
STOP LOSS: 8.29$ / LOD
SHORT FOCUSLIST
WBD
Retest of the base structure yesterday and rejected it along the 21dma today on increasing volume.
ALERT: 10.52$ + UTL
STOP LOSS: 11.59$ / HOD
XMTR
Was never able to reclaim the 10dma after their disastrous earnings. We can’t bounce off that base area, and if we lose that UTL, we could break that base lower.
ALERT: 40.45$
STOP LOSS: 43.14$ / HOD
PAYO
Another stock that had a bad earnings reaction and never was able to reclaim the 10dma. We retested the recent base structure and rejected it with a lower high today. Recent swing low as an entry.
ALERT: 5.18$
STOP LOSS: 5.62$ / HOD
PL
See annotated chart for the setup. WBPB with a 50dma rejection.
ALERT: 5.08$
STOP LOSS: 5.45$ / HOD
ABNB
We broke the larger channel on the last earnings and went to retest it and the 50dma before rejecting it again 2w ago. We rallied in the 10dma from the lows but got rejected there pretty quickly. I would play the recent swing low to confirm the BO10PB setup.
ALERT: 93.92$
STOP LOSS: 98.83$ / HOD
🎖️ = Alex’s highest conviction setups
IMPORTANT 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
STOP LOSS:
Recent swing low pivot
For less active trading, you can use the recent swing low pivot as a good structure level to place your SL, but consider that the distance with the entry is larger, and you need to adjust your position size to keep the trade risk as a % of your portfolio ideally below 0.5%
LOD (Low Of Day) / HOD (High Of Day)
I like to use the LOD of the day I enter the trade. This way, I can use a larger position for the same trade risk as a % of my portfolio. BUT requires more active trade management and expects to be taken out more often (lower hit rate).
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 all my education articles closely to learn how I handle trades around these entry pivots.
SECTORS PERFORMANCE
Leading sectors:
(XLE) Energy - is a potential short setup today with that UTL neckline breakdown at base area rejection & lower high.
(SMH) Semiconductors - Leading sector. Failed to hold that resistance area and brokedown from that UTL & the 10dma.
(TAN) Solar - Leading sector. Failed to hold that resistance area and brokedown from that UTL & the 10dma. Just like SMH
On watch:
(XBI) Biotech - We got a rejection of all kma’s & 81.75$ base top level. This is a potential short setup for me as we stand on the recent bear channel UTL. I am playing it with LABD.
(IGV) Software - Was not able to reclaim the base area and closed back at the 21dma. Need more time.
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - oscillating around with a negative reading today.
Trend @ -23 (=)
NYAD (Net Adv/Decl) - Good push down with -1770 NNL….and a clear character change.
20dma @ +126 (⬇️)
MMTH (Stocks > 200dma - LT breadth) - Big break down and close below the 10dma & Aug. high pivot.
MMFI (Stocks > 50dma - MT breadth) - Break down here as well and close below the 10dma
MMTW (Stocks > 20dma - ST breadth) - Broke that wedge UTL and closed below the 21dma
VIX (Volatility S&P 500) - gap up right into recent resistance area & 10dma. It failed to reject both and now reclaiming the 10dma. Not the action we wanted to see tbh, and it is a pretty big red flag for me.
DXY (US $) - Bounced from the support area and closed above Friday’s high. Still below the 10dma, but that was some strong action today…
US10Y/TNX (US 10Y bond yield) - Shakeout below the recent range pivot low today...
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
AEHR,SMCI,CHGG,ELF,YPF,ASC,GMAB,RCL,GPS,BAND,JXN,CCRN,HLIT,ALGM,PFGC,TGTX,IGT,LSCC,AER,WFRD,
Fundamental leaders (FA Score)
RES,SIGA,NOG,PSX,ASC,PR,DRH,TNK,ESTE,LTHM,CPE,CALM,PDCE,SWAV,RUN,MUR,HGV,SM,TRIP,ERF,
Technical leaders (TA Score)
AEHR,GPS,ELF,AEO,SMCI,CHGG,YPF,BAND,GMAB,RCL,ALGM,TGTX,CCRN,HLIT,AER,LSCC,GGB,ASC,HRMY,HZNP,
Relative Strength 1 Month (1M-RS)
AEO,BAND,CELH,SHLS,RUN,YMM,TGTX,ZTO,PDD,SMCI,SPWR,TH,CLR,ARRY,BZ,GPS,SABR,CERT,LSCC,CNK,
Relative Strength 3 Month (3M-RS)
AEHR,GPS,ELF,WFRD,BIIB,ASC,CHGG,CCRN,YPF,INSW,RCL,AEO,HLIT,SMCI,BHC,CHX,TASK,BAND,HZNP,DNUT,
Relative Strength 6 Month (6M-RS)
AEHR,ELF,ASC,CCRN,YPF,GPS,INSW,BIIB,SMCI,CHGG,WFRD,CPRX,HLIT,AEO,TNK,GMAB,DHT,CHX,SHLS,NAT,
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REFERENCES
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Great shorts list!