Alex's daily Market update & Focuslist - 10/06
21dma & resistance area rejection - market waiting for job data
Good evening traders! 👋
What we’ll cover in the Newsletter tonight:
General market analysis ($NQ/$ES levels)
Market Breadth & Internals
Prime Model spreadsheet (PT_database)
Economic Calendar
Sectors Review
Leaders list
Alex’s Portfolio update
Focuslist including setups, alert levels & explanation
GENERAL MARKET ANALYSIS ($NQ/$ES levels)
NASDAQ ($NQ) Daily
We tried to break higher today just before the market opened, but we got rejected by both the 21dma, Tuesday pivot high, and 11689$ level as well. This is not the kind of follow-through we wanted to see from the bounce yesterday. Clearly, that 21dma & resistance area (11689/11794$) is being rejected on volume for now.
Tomorrow @ 8:30 we have job data news, so this will really be important to confirm the reversal or we bounce and breakout higher.
So far, we have to respect that area & 21dma rejection, and knowing that we were playing a bear market oversold bounce, we have to assume that we’ll follow through on the downside. The trend is down. It would take a surprise in job data to resume the rally higher.
We can start tracking for a potential IBD FTD (Follow Through Day)
$NQ levels on the upside
11689/11794$ resistance area
11534$ level (June structure)
the 21dma
$NQ levels on the downside
11229$ previous swing low pivot
11285/11068$ area (June low level)
S&P500 ($ES) Daily
$ES levels on the upside
3780$ level
3855/3903$ area from Sept. & June/July structure
the 21dma
$ES levels on the downside
3735$ level
3639$ last week swing low pivot
3596$ level (2020 structure)
MARKET BREADTH & INTERNALS
NYHL (New 52W Highs - Lows) - Acceleration on the downside with -135 NNH today.
NYAD (Net Adv/Decl) - Pretty much unchanged @ -1204 today.
20dma @ -462 (⬇️)
MCOSINYA (McClellan Oscillator) - McClellan oscillator turned negative again today @ -23.71. 2 days positive…that’s not really “healthy”.
MMTH (Stocks > 200dma - LT breadth) - Failed breakout of the 25.05$ pivot AND the 50dma today. Could be a reversal point.
MMFI (Stocks > 50dma - MT breadth) - Not able to get in that resistance area and above the 21dma that still acts as resistance.
MMTW (Stocks > 20dma - ST breadth) - Rejection of the 49.43$ prior rally high pivot today. We just made a double top with Tuesday high. Let’s see if it’s a reversal setup or not.
VIX - Exactly what we NOT wanted to see. A bounce off the 21dma and reclaim of the 30$ level. I REALLY don’t like this bounce.
PCCE (PUT/CALL EQUITY RATIO) - 0.825
DXY (US $) - Another move that we didn’t want to see. As you know, the correlation is very high right now with DXY & the market, so if we resume the trend higher here, this is really not good news. We bounced from the 21dma again and broke that channel DTL as well.
US10Y (US 10Y bond yield) - 10Y is also not the action we wanted to see as we followed-through on yesterday’s channel breakout. We closed at the 3.829 pivot that I was watching.
IEI/HYG (Credit Spread) - Credit Spread with a small reversal right in that support area. Not yet a red flag, but something to look for tomorrow.
BTC/USD (Bitcoin) - Red flag on BTC as well. Was not able to breakout off Tuesday's high and rejected the 50dma for the 3rd time. Looks like a reversal to me.
PRIME Model spreadsheet (PT_database)
In the last few years, I've developed a model based largely on #CANSLIM fundamentals characteristics to focus on the best stocks. Not having the money to afford a #MarketSmith sub at the time, I built my own fundamental & technical scoring system into an Excel spreadsheet
PRIME Model explained
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Use wisely, and enjoy!
This was a FREE preview of my daily Market update & Focuslist letter. In the following sections, I’ll cover important parts of my daily routine & preparation for tomorrow’s trading day that you don’t want to miss!
Economic Calendar
Sectors Review
Leaders list
Alex’s Portfolio update
Focuslist including setups, alert levels & explanation
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ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Sectors Relative Strength - Weekly (RS vs SPY)
Top 3: XLE - XME - SMH (new)
(XBI) Biotech - XBI acting super strong and held the support 81.75$ level again today. Outside of XLE, this is by far my favorite sector.
(XLE) Energy - Energy continues higher on the 5th consecutive green day from the 10dma breakout Monday.
(XME) Metals & Mining - XME still struggling at the DTL & 50dma. Could be a reversal setup at the 50dma, we’ll have to see tomorrow, but seems tired.
(XLV) Health Care - XLV rejected at the 50dma and back at the 21dma and stage 3 base area. Higher volume.
(IGV) Software - Tried to breakout from the stage 1 base area, but squatted back at the opening price. Not bad action, but might need a couple days of tight action at these levels.
(TAN) Solar - Solar is following through on the downside and confirming the rejection of the base area. This look like a very good short setup.
(SMH) Semiconductor - Semi’s with at reversal on higher volume at the 21dma and recent base structure. Tomorrow will give us more information, but note that AMD missed big time on earnings AMC, so we could see a reversal lower here tomorrow.
Alex’s TAKEAWAYS:
Things can change very quickly in this market, and that’s why we have to stay open and follow price action very closely. Today with the NQ 11689$ & 21dma rejection, along with bounce from key areas on $DXY $US10Y and also the VIX spiking… I am certainly leaning toward the short side. That being said, I also think that job data tomorrow morning @ 8:30 will have a big impact on the market direction, so stay open to anything!
We are still in a bear market, but we’ll follow price action as usual and the tape will tell us if this rally has more legs or not! One day & one level at a time!
LEADERS LIST
Overall leaders (PRIME Score)
WTI,YPF,HLIT,CEIX,XMTR,CCRN,PBF,PAYO,RVNC,INSW,VLD,ERF,TALO,DK,ON,DEN,MPC,TNK,CRK,MUR,
Fundamental leaders (FA Score)
AMR,HCC,DK,MRO,ERF,DVAX,MGM,DRH,TELL,LBRT,BHF,ENLC,SWAV,TRGP,WTI,HLIT,MPC,FANG,KOS,ARCH,
Technical leaders (TA Score)
WTI,RVNC,YPF,CEIX,HLIT,XMTR,PAYO,PBF,CCRN,ON,CHRD,PCG,TNK,WFRD,TALO,AMR,WOLF,DEN,VLD,SMCI,
Relative Strength 1 Month (1M-RS)
RVNC,STNE,PBF,HLIT,BTU,CPNG,RCUS,BVN,WFRD,WTI,TLRY,PAAS,AZUL,BECN,EGY,HZNP,AMR,PCG,HCC,CCRN,
Relative Strength 3 Month (3M-RS)
VLD,TH,YPF,MARA,RVNC,WTI,AEHR,RXDX,WFRD,INSW,XMTR,STEM,TNK,WOLF,IEA,CEIX,CPRX,CRK,PR,TALO,
Relative Strength 6 Month (6M-RS)
TH,CEIX,STNG,WTI,TNK,INSW,SWIR,DCPH,STKL,MRSN,SMCI,RXRX,CELH,ARLP,XMTR,PAYO,HLIT,RVNC,CCRN,RXDX,
PT PORTFOLIO UPDATE
Position management GAMEPLAN:
Position size: 1/2 positions max (10% of equity)
Position management
First trim: sell 25% initial position
Trim @ first day EOD
SL moved @ breakeven
2nd trim: sell 25% initial position - 10dma EOD break
3rd trim: sell 50% initial position - 21dma EOD break
Scale-out approach
Alex’s FOCUSLIST
ON 70.89, VLD 4.59+DTL, DV 29.09, LABU 7.99
ON
Recent leading Semi’s name consolidated in a really controlled way just under the 50dma in a very nice tight area on low volume. I’ll be looking at this LT base area reclaim and the recent swing high for a potential entry.
UPDATE: Tried to breakout of the entry pivot but got rejected today. Showed amazing RS all day long and still closed green.
Entry: recent swing high pivot @ 70.89$
VLD
One of the most interesting setups right now. Huge 370% first leg from the lows and recently a nice consolidation above the 50dma. This is still a pretty volatile and low float stock, but I really like the fundamentals and the way we contracted in the last few weeks. Could be a big winner.
UPDATE: Tried to breakout today as well and was up more than 7% at some point today, but squatted and closed just below the pivot, but still green. Amazing RS today too.
Entry: recent swing high pivot @ 4.59$
DV
One of the software showing the highest RS in the last few weeks. I like how we breakout of that support area on Tuesday, retested it, and bounced today. This area is defending and I would look at the previous swing high for an entry.
Entry: recent swing high pivot @ 29.09$
LABU
Still looking at that trade for an XBI proxy tomorrow. Still like the way it consolidates and holds that base area.
Entry: recent swing high pivot @ 7.99$
INDICES trades (SQQQ/TQQQ)
With that kind of pivot & 21dma rejection today, I’ll be trying to position on the short side via SQQQ. If we can get that 11534$ pivot retest on NQ, that would be a good place to initiate a short via SQQQ on the reversal. Any bounce at the open will be shortable. Otherwise, I’ll try to use the low of an intraday structure to initiate it. If the job data news is bullish and the market reacts very powerfully, then the SQQQ might transform into a TQQQ trade
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.
Want to know how to execute these setups & trade side by side with me?
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REFERENCES
Articles on the system:
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