Good evening folks!
We did not get the follow-through action we were looking for, but today was not that bad either and showed constructive action underneath, as we’ll see tonight.
The market doesn’t move in a straight line, and it’s normal to have pullback & sideway action along the way.
Ready?… Let’s go!
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Alex ✌️
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GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Today, we could not push and follow through on yesterday’s rally as we faded the early strength and came down to retest near the 4050$ recent structure level. I don’t see today as a red flag. it’s normal that we might pullback & consolidate a bit to remove the excess and let the kma’s catch up.
I see a potential WBPB setup on the indices right now. Despite ES_F having a flat base breakout (4050$ level), NQ_F & RTY_F both broke out of wedges & DTL. We are retesting those levels before potentially resuming the trend higher.
On the upside, today’s high (4110$) will be an important level to keep an eye on to confirm a potential continuation higher.
On the downside, I am watching a potential retest of the 4050$ area closely tomorrow. That would be the “ideal” scenario. We could also get a deeper pullback to retest the 10dma or even the 4016$ level…but that would be less ideal and way harder to keep our positions. Below that level, it would be a big red flag for me.
NASDAQ (NQ_F) Daily
RUSSELL 2K (RTY_F) Daily
Alex’s TAKEAWAYS
The market could not follow through, so we could expect a small pullback to retest close levels below. If we didn’t find support, that would be another story…but so far, the trend is up, and we have to assume we’ll be supported at support levels & kma’s.
Overall, the market could not follow through, so we have to expect a pullback and see if the DIP is being bought…this will be the BIG TELL.
Some observations:
Some shy moves to new ATH in current leaders (AEHR, CELH, etc)
Leading names supported at 10dma with higher lows - constructive action
VIX selloff continues and is now BELOW 20
Breadth took a pause but did not crash.
DXY LT base breakdown and below 105$
10Y breaking down, too, and now sitting at the important 3.50% area.
Leading sectors SMH, XLV, and IGV are showing constructive action
Leading sectors TAN & XLE with failed breakout and at a pivot point
Like always, I’m always staying alert if the conditions were to change. One step at a time using progressive exposure!
Gameplan:
Tomorrow, I want to see how the market responds to a potential retest of 4050$ or even the 10dma. I expect to be managing my positions until we get a reclaim of today’s high, confirming the continuation.
At this point, I have enough exposure, especially if this pullback were to be deeper than I thought.
In short, I’m watching until we see that the dip is being bought.
If we rollover, I will be out and 100% cash again.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
LONG FOCUSLIST
ZETA 8.86, DVAX 12.67, HRMY 60.62, CPRX 17.22, GFS DTL, BTU DTL+31.96,
ZETA🎖️
A name that I had in my Focuslist earlier this week and that I removed yesterday because of yesterday’s lagging action… never again, Alex ;) We were still above the 21dma and volume lower than average. We just broke out of the lower cheat area, but I will still be looking at the base breakout as this name has been a power house in the last weeks, and I like the RS it showed.
ALERT: 8.86$
STOP LOSS (POSITION/SWING): 8.20$/LOD
DVAX
A retest of the stage 1 base area after a very contained pullback on decreasing volume. If we reclaim the initial base breakout pivot, it would confirm the potential continuation.
UPDATE: Was not able to breakout today, still on FL.
ALERT: 12.67$
STOP LOSS (POSITION/SWING): 11.70$ / LOD
HRMY
Been building that consolidation for a few days/weeks above that 21dma after the PEG on the last earnings. Seems ready to breakout. Let’s not fakeout this time…
UPDATE: Retested the 59.27$ pivot and could not breakout the entry pivot, but closed green and on increasing volume.
ALERT: 59.27$
STOP LOSS (POSITION/SWING): 57.50$ / LOD
CPRX🎖️
A potential leading name I traded last week had a nice bounce at the 10dma today. This could be a nice entry on the base & 10dma retest following the false breakout.
UPDATE: Bounce off the 10dma with a higher low. I like the setup for a potential reclaim of the 17.22$ level.
ALERT:17.22$
STOP LOSS (POSITION/SWING): 15.95$ / LOD
GFS
Semi name showing great action on the retest of the recent base area. I like how we hold that area, the 21dma, and just made a higher low with today’s action. I would use the DTL to confirm the setup & potential continuation.
ALERT: DTL
STOP LOSS (POSITION/SWING): 60.45$ / LOD
BTU
A name that I traded last week but exited just before the recent breakout. I still like the way we are pulling back on decreasing volume. I would use the breakout day’s high reclaim to confirm the continuation. A weak open tomorrow with a 10dma retest and bounce would be a powerful setup.
ALERT: 31.96$ + DTL
STOP LOSS (POSITION/SWING): 30.89$ / LOD
SHORT FOCUSLIST
🎖️ = 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 - A pivotal day for XLE tomorrow.
DTL breakout = upside
UTL breakdown = downside
(SMH) Semiconductors - Retest the DTL & support area. Constructive action and no red flags.
(TAN) Solar - Was not able to follow through on the breakout and came back in below the base area on volume. Still above all kma's, but that’s a red flag to me…
On watch:
(XBI) Biotech - Interesting action as we tried to fail the 83.06$ pivot breakout but reclaimed it by EOD. Tomorrow will tell us more.
(IGV) Software - SOLID action as we follow through on the 271.80$ pivot breakout, and on volume!
(XLV) Healthcare - This sector has been very strong in the past few weeks and is worth tracking. Near ATH…
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - If someone is saying today's was not constructive... 2nd highest Net New High (NNH) of the year
Trend @ -15 (⬆️)
NYAD (Net Adv/Decl) - Lower, but still positive.
20dma @ +246 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - Faded the gap, but still green.
MMFI (Stocks > 50dma - MT breadth) - Faded the gap, and closed unchanged.
MMTW (Stocks > 20dma - ST breadth) - Faded the gap and retested the DTL before closing slightly red. Not a big deal and similar to what we saw after Nov. 10th big rally.
VIX (Volatility S&P 500) - Approaching 18.50/19.50$ critical area coincided with a rally reversal in 2022. Will this time be different...we should know soon enough!
DXY (US $) - just broke down from the important 105$ base area. This is a big move today for the $.
US10Y/TNX (US 10Y bond yield) - coming down below all kma's and very close to retesting the 3.50% base area level. This will be another big tell for the market tomorrow.
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
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LEADERS LIST
Overall leaders (PRIME Score)
AEHR,ELF,VCYT,CHGG,ASC,IGT,GPS,SMCI,RCUS,LSCC,GMAB,OII,BTU,RCL,YPF,ALGM,RLX,HZNP,PFGC,CHWY,
Fundamental leaders (FA Score)
RES,SIGA,NOG,PSX,ASC,PR,DRH,TNK,ESTE,LTHM,CPE,CALM,PDCE,SWAV,RUN,MUR,HGV,SM,TRIP,HP,
Technical leaders (TA Score)
AEHR,VCYT,GPS,RCUS,ELF,RLX,HZNP,AEO,LSCC,CHWY,CHGG,OII,IGT,GMAB,ALGM,AER,ADT,BAND,RCL,YPF,
Relative Strength 1 Month (1M-RS)
YMM,XPEV,PDD,BZ,VIPS,AEO,PVH,AEHR,VCYT,IQ,HIMS,PRM,RADI,HZNP,JD,CERT,RCUS,WMG,ZTO,LI,
Relative Strength 3 Month (3M-RS)
PRTA,AEHR,RLX,HZNP,OII,GPS,BAND,BIIB,ASC,VCYT,RCL,WFRD,ELF,YPF,LPG,CHGG,IGT,CHX,CCRN,ALGM,
Relative Strength 6 Month (6M-RS)
AEHR,PRTA,CPRX,TH,ELF,ASC,VRDN,CCRN,YPF,TGTX,NTNX,INSW,NAT,RCUS,ARRY,SMCI,VCYT,CELH,DHT,BIIB,
REFERENCES
Articles on the system:
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