Good evening folks!
Hope you had an amazing weekend and recharged your Mental Capital to crush another trading week :)
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MARKET REVIEW
You’ll notice a difference in my market analysis starting this wknd. I’ll start following more closely the Russel 2K (RTY) index as it better reflect the stocks that I trade, namely small to mid capitalization names. Also, this area of the market started to lead over the larger cap of the S&P 500, so another reason for that switch in focus.
RTY retested the 50dma Friday and got rejected again for a 2nd time, in addition to creating a LOWER HIGH in that market structure. That got me defensive before the weekend.
On the positive, we are still above the 5dma and we closed in the upper half of the candle and above recent support area.
We are in an indecision zone right now for me. I want to see if the market will resume his rally by a breakout of the 50dma or roll-over from here.
That being said, It’s been a long time I’ve had to trim my FocusList to limit myself to 10 names…so that might be a clue that market might not rollover, but we never know.
Upside:
On the upside, the ideal scenario would be a retake of the 50dma & 1888$ pivot (recent swing high).
We’ll have to be careful if that’s the case, because not far above is a very major potential resistance, 1915$ level from early 2022 consolidation.
Downside:
A close below Friday’s low @ 1848$ would really not be a good sign and might be indicative of more selling pressure ahead.
MARKET BREADTH
NET new 1M & 52W high on the NYSE. Still healthy env.
McClellan back at 158…this is really good seeing the market seeing a break like that and the McClellan dropping back in the 100’s.
Stocks > 50dma has pullback a bit Friday, but still above recent swing high of 38%. Nothing to worry here.
VIX confirming the recent swing low rejection along the DTL forming from May bottom. Volatility continues to comes out of the market…this is good sign.
ECONOMIC CALENDAR
SECTORS PERFORMANCE
Look who leading again last week, SOLAR. This sector is really leading the move. Other more growth sector are green for the week, but it was still a very narrow participation last week. We’ll need to see broader participation if we want to get a chance to follow through higher.
Crude Oil (CL_F) continues his breakout move from the 114/116$ area. We now opened the week above 120$, which we have not been since the Ukraine war was declared.
NG_F (Natural Gas) found support at the 10/21dma ish Friday by making another higher low and is now gapping higher to open the week. We have our DTL that’s pretty clear right now and still looking at 8.91$ for a potential 3rd b/o attempt. If we do, look at natgas stocks shooting higher this week. EQT, SWN, etc.
PORTFOLIO UPDATE
I got defensive last Friday we I saw that we made a 2nd 50dma rejection and also a lower low on the indices. My job #1 is to manage risk…I there was a risk of gap down this wknd imo.
For that reason I closed my new positions that I had not enough cushion and only kept my core positions. I wanted to reduce my exposure to a minimum. We’ll have time to rebuild the exposure if we confirm a new rally leg, but a rollover scenario can make important P&L damage if you’re too heavy.
New positions:
Trimmed positions:
LNTH (1/2 pos)
CELH (1/2 pos)
Closed positions:
SPXL (Wanted my market exposure off)
ENPH (Not enough cushion after missing the good R/R entry… look how important it is to get a good entry close to the pivot. If my broker did not fucked up Thursday, I would still have my position with a good cushion.)
DAILY FOCUSLIST
10 names in my FocusList tonight!
Surprisingly, I’ve got a saw a good amount of good setups tonight which I did not expect due to the weak market Friday and 2nd 50dma rejection. Anyway, the goal is to play the individual names and that could be indicative that the market will be stronger that I anticipated to open the week.
Tonight’s names are in these sectors:
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PT FocusList - TradingView shared link
CELH - It confirmed his BORS setup Thursday with the most aggressive DTL entry, but we came back to retest the breakout level again Friday due to market weakness. I really liked how we held very well at some point showing good RS. I would now use the most recent 70.25$ swing high as confirmation for an entry.
HDSN - Never ever remove a stock from your FL because it squatted on your entry pivot. This name has still a valid setup due to the successful breakout retest. I would still look to enter on the 10.29$ pivot. I would be pretty defensive if it would squat again and sell at breakeven just because that’s a low float and volatile name.
ENPH - Solar sector leader and I really want to position in the name. We had a successful BORS setup completion Thursday and tried to follow through unsuccessfully on Friday. We might need a couple days to digest this move, but if not, 200.68$ will be the pivot I want to get engaged with.
HP - Probably the cleanest technical setup in my FL and will be a name that I will be HIGHLY interested. That’s a picture perfect BORS setup that we kinda confirmed Friday with the DTL breakout. 52.21$ breakout swing high is the best entry to confirm the setup.
REI - Another oil name that was in my FL last week for the low pivot breakout, but is now setting up again for a larger base breakout. I would be ready to use the recent swing high 4.79$ pivot for an early entry before 4.85 base top. Look how we held the 5dma on this whole PB…very clean.
ZIM - I’ve traded this one earlier this year and his now setting back with a BORS setup after a long consolidation that we breakout 2w ago. We had our retest of this area following the dividend las week and held the 21dma very well. 68.47$ pivot for setup confirmation & entry.
MPLN - Another name that I’m really interested in. Tech name that is coming out of a stage 1 base. We even had our area retest last week and we are now looking for a DTL breakout to confirm the aggressive entry, or the 5.31 or 5.43 recent swing high pivot for a more conservative entry.
AN - We can see on a longer time frame the WB last month, following by a retest in May. I am looking at the most recent DTL or 122.23$ pivot for a WB confirmation.
MAT - Another quick breakout area retest on the larger timeframe that might result in a new uptrend with a DTL breakout.
TMST - I see a clear change of character on that 3rd breakout area retest. Notice how for the first time, we only reversed a single day before finding support at recent swing high and also the 10dma. We are forming a nice DTL to play this potential breakout, or simply the 24.69$ breakout pivot for a more traditional entry.
RELATIVE STRENGTH
I’ll start tracking top fundamental stocks with highest 6 months Relative Strength, holding up the best short term. (40% 1M-RS + 60% 6M-RS ratio).
During market correction, you want to keep track of these names as they will be the one to watch when conditions improves.
Relative Strength 40/60 - TOP 20:
NINE,CVI,PBF,SD,CRK,EGY,BORR,SWN,ESTE,WTI,DINO,KOS,PTEN,CPG,SQM,AR,CAL,HRB,EQT,RRC,
Relative Strength 1 Month - TOP 20:
BKSY,LPI,PLAB,NINE,WTI,DNA,CAL,EGY,SD,RELY,ESTE,DLO,YMM,PBF,CPG,DOCN,FRO,DELL,SM,M,
REFERENCES
Articles on my system:
I really hope that you enjoyed. If you did, please share it so that more folks can be reached and this Newsletter can grow. :)
Hi Alex, When you note SL as 10dma, is that based on a close below or as soon as hit?
Amazing!! I have 2 questions Alex:
- I have too many names on my focus list, how would you trim them down / which one to prioritise?
- For the RS stock that you track down, do you use a scanner to do it or you just do it manually? (I only have access to Finviz so I should do a scan with stock up 40% last month and 60% last 6 months, is that correct?
Thanks a lot !!