Alex's daily Market update & Focuslist - 05/31
Breadth continues to weaken as mega-caps/SMH/XLK couldn't hold the market today.
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GENERAL MARKET ANALYSIS
NASDAQ (NQ_F) Daily
Price Action Analysis:
NQ short-term pullback continued today as we retested the 14284$ structure level. It is still impressive how well we hold, and that pullback seems to be healthy so far as we digest the recent strong uptrend.
We are now 8.1% above the 50dma, so definitely still ST extended.
We remain in an uptrend, above all kma’s.
RUSSELL 2K growth (IWO) Daily
Price Action Analysis:
IWO lost the 10/21 & 72/89c today but did bounce pretty strong at the LT UTL and the recent swing low pivot.
We’ll have to see if we can follow through on that EOD bounce tomorrow and reclaim kma’s and AVWAP’s.
Buyers are still showing up. This is constructive.
S&P500 (ES_F) Daily
Price Action Analysis:
10dma & L-AVWAP retest today as we try to determine if that failed breakout will lead to a re-attempt. I liked how it was supported today, and it’s looking constructive for a potential bounce tomorrow.
If we break below the 10/21c and AVWAP, we might see further selling pressure.
PT_UL BREADTH & INTERNALS
Price closed NEGATIVE, BELOW the 5dma & still ABOVE 10/21c.
Breadth was negative with a weak DOWN volume, and participation weakened again with a -24% DOWN day.
MSCI downtrend + BELOW 10dma.
0.9x daily momentum. (weak)
NNH at +3 (11th in a row, but cracked today)
The market model is now on a RED signal (🟥)
Bottomline: The breadth continued to weaken today as the semis and AI stocks were not there to lift it. We saw good action in some select sectors, but more participation was needed.
Internals
Muted action today again as we trade around the 10/21c.
MOVE (Merrill Lynch Option Volatility Estimate - Bond market volatility)
Retest of the 10/21c coming.
21dma and base area bounce today. Let’s see if we break below these levels tomorrow or not. This is an area to watch for potential support.
72/89c reclaim on above-average volume. We are now retesting the 10/21c, and we’ll have to look at this one closely tomorrow.
Looks very toppy.
BTC/USD (Bitcoin)
BTC with a nice push from the consolidation & 72/89c this weekend on the debt ceiling news. We are now getting some resistance at the H-AVWAP; it seems like a normal reaction so far.
SECTORS ANALYSIS
1M & 5D Relative Strength (SPY) sectors performance:
Leading sectors:
SMH Semiconductors: ST extended - PB underway & kma’s catching up
XLK Technology: ST extended - PB underway & kma’s catching up
IGV Software: ST extended - Strong bounce above the 5dma today. We are still below the swing high pivot, but this is great RS compared to SMH/XLK.
CIBR Cybersecurity: Strong bounce above the 5dma today. We are still below the swing high pivot, but this is great RS compared to SMH/XLK.
FDN Internet: Bounced off the 154.88$ level today and will confirm the BORS setup tomorrow if we reclaim the recent swing high pivot.
Sectors potential playable setups :
ITB Home Builders: We rejected the 10/21c & UTL today, but we found some buying inside the base area.
TAN Solar: Rejected at the 10/21c this morning on a gap down, but we bounced from the recent lows base area and closed in the upper range. If we can follow through on that bounce tomorrow, it will be constructive.
XBI Biotech: Opened very strong but got rejected at the high-AVWAP and closed below the 10dma while showing good strength this after-noon. If we can reclaim that AVWAP and today’s high, we might confirm the bounce & setup.
XLY Consumer discretionary: 149.63$ base level & 21dma retest today, and reclaimed all kma’s to close in the upper range. This is constructive, and we might confirm upside continuation if we reclaim the 153.93$ level.
ROBO Robotics & Automation: 21dma retest and bounce as we hold the base area and 10/21c. Tomorrow is critical to know if we bounce or break.
FOCUS & LEADERS LIST
VCYT (BO10PB) - Alert: 26.43, SL: 25.09 / LOD
One of my position is still building base on bases at the 10dma and right below the important base area above. If we can reclaim the recent swing high pivot, I will look to add it back to my core for a possible breakout. Nice volume profile and bounce today.
CRSP (BO10PB) - Alert: 65.5, SL: 62.75 / LOD
Tried to breakout today but failed at yesterday’s high pivot. Still in play.
RDFN (BO21PB) - Alert: 9.91, SL: 9.04 / LOD
Base area shakeout & reclaim today. Recent swing high and PEG_AVWAP is where I’ll look to initiate a pilot.
MARA (BORL) - Alert: 10.2, SL: 9.01 / LOD
Crypto stocks seem to be setup as a group, so if BTC/Cryptos is showing strength tomorrow, these stocks will give good entries after a few weeks of consolidations.
FLYW (BO72PB) - Alert: 30.18, SL: 29.13 / LOD
A pretty volatile & loose name, but I like the fundamentals and the way we traded around that base area. Today’s volume on that base retest is very constructive.
RCL (BO10PB) - Alert: 81.16, SL: 78.5 / LOD
Cruise companies are showing constructive setups as a group, as I had a couple in tonight’s scan. If we can reclaim the recent swing high, we could confirm a continuation higher.
CELH (BO21PB) - Alert: 126.43, SL: 122.62 / LOD
A name that I am watching closely because of recent earnings gap, and the current 21dma retest that we seems to hold today. I’ll try to get in with an early entry if we can reclaim today’s high pivot. With these kind of entries, if it don’t show lot of strength on the follow through, you cut the position EOD.
EXAS (BO10PB) - Alert: 82.81, SL: 79.69 / LOD
Another PEG setup as we are building higher lows at the 10dma.
STNE (BO50PB) - Alert: 12.67, SL: 12.13 / LOD
Recent winner building small consolidation at the lows-AVWAP and stage 1 base retest. This is a potential bounce area, and if we can reclaim the last two days high pivot, we could see an uptrend continuation setup.
LEADERS LIST
Overall leaders (PRIME Score)
IMGN,SDGR,APP,DUOL,ACVA,RDFN,MDB,TGTX,NVDA,RMBS,ELF,CELH,HUBS,EXAS,SHOP,ASAN,STNE,PRG,MAXN,S,
Fundamental leaders (FA Score)
RCL,ELF,NCLH,CELH,TMDX,DT,WNC,HTGC,SDGR,EXAS,CRSP,ALGM,ARRY,CSIQ,ALB,MGM,CALM,PANW,EQC,SEDG,
Technical leaders (TA Score)
IMGN,SMCI,PLTR,APP,NVDA,ASAN,SDGR,RMBS,TGTX,DUOL,ACVA,MDB,ELF,HUBS,S,RDFN,CRWD,DV,ACLS,OKTA,
Relative Strength 1 Month (1M-RS)
SMCI,PLTR,IMGN,NET,ASAN,MNDY,RMBS,NVDA,APP,ENTG,SDGR,ZS,VRT,LMND,ACLS,MCB,CRWD,S,FSLY,PATH,
Relative Strength 3 Month (3M-RS)
IMGN,SMCI,PLTR,APP,TGTX,DUOL,NVDA,ASAN,MAXN,SDGR,STNE,RMBS,SWAV,MDB,ACVA,ELF,SHOP,CELH,MARA,HUBS,
Relative Strength 6 Month (6M-RS)
IMGN,SMCI,TGTX,PLTR,APP,NVDA,DUOL,SDGR,MDB,ACVA,ASAN,ELF,RMBS,MAXN,RDFN,EXAS,HUBS,ACLS,MARA,APLS,
Alex’s TAKEAWAYS & GAMEPLAN
Tech/semis pullback continues as we saw some rotation attempt in more defensive sectors like GDX, XLV, and XLP, but also in recent strong sectors like XBI, CIBR, IGV, etc.
Despite seeing many good setups and constructive action on the indices right now, my Market model turned to RED today, so unless breadth confirms a turnaround & bounce tomorrow, this weakening breadth is worrisome and a call to wait for more information.
Here are couples of things I’ll watch tomorrow:
NQ pullback continues, and now 8% from the 50dma.
ES followed through on the false breakout but showed good support at kma’s. Key area.
IWO followed through and broke below the 10/21c. We saw good support as we closed in the upper range, but still below kma’s. RED FLAG.
Breadth continues to weaken, especially with XLK/SMH not lifting the market.
With NQ & tech stocks ST extended, it will be important to see a ROTATION into other sectors like XBI, ITB, TAN, XLY, etc. to keep this uptrend intact while NQ/tech consolidate & digest to fast move we just saw.
Internals (VIX/DXY/10Y/Credit Spreads) are throwing mixed signals. VIX & Credit Spreads on watch tomorrow.
Economic news/events:
GAME PLAN:
Exposure model = RED signal (🟥)
No trade for me tomorrow unless we flip back to ORANGE.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
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Hi Alex,
Forgive my ignorance, but can you point to a resource or perhaps update your own glossary that explains what you mean by 10/21c and 72/89c and why they are significant? Also, I am seeing increased reference to VWAPs/AVWAPs and while I am aware of Brian Shannon's work I haven't had a chance to study it. Perhaps a brief summary in your glossary would be appropriate? Finally, and just my personal preference, but I would prefer the sector summaries to be next to each sector's respective chart. For me this would make it easier to see what you see. Thank you for all you do and I appreciate your time and consideration!