Alex's daily Market update & Focuslist - 01/09
The market failed to follow through
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Price Action Analysis:
ES_F started the day very positively by retesting the 3930$ intraday base area before rallying more than 1% into the 50dma and 3964$ levels. We got rejected there, and we could not hold today’s gain to close negative.
That’s a pretty nasty reversal day and not the follow-through action I wanted to see after Friday’s decisive breakout.
Like last night, I’ll be closely watching the levels on the downside for potential support, but that’s the first strike of that potential rally. That’s why you’ll always hear me talk about “potential” or “possible,” etc. In trading, we live in probabilities and never can’t be sure of an outcome.
We’ll have to take it day by day as we’re STILL below the 50dma.
On the upside,
The first significant level to look for tomorrow will be the 50dma, then if we can push through it, 3964$ is my next level of interest.
On the downside,
If we follow through on this reversal, I will look at the 21/10dma & 3898$ levels for potential support.
I think this potential rally won’t be if we can't hold these levels.
NASDAQ (NQ_F) Daily
RUSSELL 2K (RTY_F) Daily
In the following sections of tonight’s letter, I’ll cover essential parts of my daily routine & preparation for tomorrow’s trading session.
✅ My overall current market Takeaways & GAMEPLAN for tomorrow
✅ My daily Focuslist, including setups, alert levels & explanation (LONG/SHORT)
✅ My Portfolio update
✅ Sectors Review
✅ Market Breadth & Internals
✅ Economic Calendar
✅ Prime Model spreadsheet (PT_database)
✅ Leaders list (technicals, fundamentals & potential TMLs)
Alex’s TAKEAWAYS
Today was not the follow-through I expected after Friday’s decisive breakout.
We also saw many powerful moves in individual names, collaborating with the breadth improvement of the last few days…but many reversed this afternoon to close in their lower range.
This is not great action, but I really want to see the next 1-3 days to see if we’ll be supported quickly and find support at the 21dma or inside the consolidation area we just broke. It’s not unusual to see a first 50dma & important resistance area rejection like that only to continue higher. That being said, we must respect that reversal and adjust our exposure and aggressivity accordingly. Tomorrow, we can either rollover or find support quickly and resume the ST uptrend. We have to respect both scenarios.
Will this be a multi-day/week/month rally? I don’t know. I know the probabilities are shifting on the long side, and we’ll play these odds as long as they are there. We will have our signal when things turn.
So day by day, we’ll follow price action & the trend.
Some observations:
ES_F reversal & 50dma & 3963$ rejection today.
VIX reversal, but somewhat feeble.
DXY (US$) - following through on the downside and breaking down from the 103.50$ level.
The 10Y following through on the downside
Overall the breadth continues to improve
The reversal we saw on the strong stocks today (SMCI, for ex.) is a big cautious sign.
Market health & Trend indicators:
LT_SIGNAL: uptrend (black) + BELOW 50dma = BEAR market under pressure (🟨)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = UPTREND (🟩)
Tomorrow's economic news:
GAME PLAN:
Unless we reclaim the 50dma tomorrow, I’ll be managing my two open positions tomorrow and will probably not open new exposure.
We need more information on either side to confirm anything, and I don’t feel it’s a market to be aggressive after today’s reversal.
We are still above the 21dma, so it’s a long exposure only for me, but this might change again tomorrow. We’ll see.
EXPOSURE MODEL:
FOCUSLIST (LONG)
FLYW 25, BAND 23.18,
FLYW - Alert: 25, SL: 24.23
We tried to breakout out the 25$ pivot today, but we got dragged down with the market reversal this afternoon.
BAND - Alert: 23.18, SL: 20.69
One of the best performers of the last six months is still in a clear channel on low volume for the past couple of weeks. We got rejected at the 10/21dma today, but I want to keep an eye on this one if the market was to rally higher. Reclaiming that swing high would also coincide with a channel DTL breakout. Not a high conviction setup for tomorrow, but if it works, it could be a great entry off a potential lower high at the 50d.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
SECTORS PERFORMANCE
Leading sectors:
(XBI) Biotech - The chop fest continues… We failed to breakout higher today and reversed ON VOLUME. This sector is really not looking to good right now, even if it’s still in range.
(GDX) Gold miners - Reversal after a gap up. This is still healthy action IMO, as we were ST extended. Letting the 10dma catch up and consolidate in the next few days could offer us another entry into this sector.
(XLE) Energy - Gapped up into the 50d and rejected it. We’re still above the 10/21dma, but not the greatest action.
CL_F (Crude Oil) - Tried to rally again into the 21dma and pinto the 76$ resistance level but got rejected.
(XME) Metals & Mining - Got rejected at the recent 53.84$ recent swing high. Still above support area.
(XLV) Healthcare - Healthcare broke the 50dma and recent consolidation. This is no bueno…
Sectors on watch:
(SMH) Semiconductors - This was the strongest sector at the open, but as we reached the base area, we got rejected and closed flat from the open. A couple of days of consolidation would only be healthy.
(TAN) Solar - Rejected at the 21dma & inside resistance area.
MARKET BREADTH & INTERNALS
$USHL (Cumulative new 52W Highs/Lows & 50dma)
Still on bear market signal…BUT still UP. We are in a BEAR market under pressure signal.
LT_SIGNAL: uptrend (black) + BELOW 50dma = BEAR market under pressure (🟨)
!MCSUMNYA (McClellan summation index & 10dma)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = UPTREND (🟩)
NYHL (New 52W Highs/Lows) - Continues to increase. Breadth is strong. At 91 NNH, we are close to the highest we’ve been in this entire bear market. Despite this reversal today, things continue to improve under the surface.
NYAD (Net Adv/Decl) - Weaker advances today, but still positive.
MMFI (Stocks > 50dma - MT breadth) - Rejected at the 50dma.
MMTW (Stocks > 20dma - ST breadth) - We were rejected today at the overbought resistance area. It would be a logical spot for a reversal, but we could continue to trend higher as we did in Aug.
VIX (Volatility S&P 500) - Inside day.
DXY/TNX (US$) - Following-through and undercut the 103.50$ level. New low.
US10Y/TNX (US 10Y bond yield) - Follow-through down.
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
ARDX,AEHR,RIG,CPRX,TGTX,OII,WMG,YY,FOUR,SMCI,FTAI,COTY,RCL,ELF,CPRI,IGT,CCL,ALGM,VAL,CAKE,
Fundamental leaders (FA Score)
NOG,FRO,CALM,PR,RUN,AEHR,HGV,TRIP,GFS,JXN,LBRT,DVAX,CEIX,DK,PBF,ALB,LYV,EURN,NEX,ARDX,
Technical leaders (TA Score)
TGTX,ARDX,AEHR,RIG,OII,WMG,CPRX,YY,COTY,FTAI,HAL,CPRI,RCL,FOUR,SMCI,CAKE,ELF,IGT,ALGM,KLAC,
Relative Strength 1 Month (1M-RS)
AUPH,TGTX,ARDX,RIG,NVAX,AEHR,CARG,HAL,SPR,SABR,FTAI,COTY,BTTR,CLF,CSIQ,CCJ,WMG,PTEN,CAKE,FOUR,
Relative Strength 3 Month (3M-RS)
TGTX,BAND,ARDX,OII,RIG,WMG,AEHR,CPRX,NLY,SMCI,YY,COTY,ELF,CPRI,CCL,IGT,FTAI,RCL,ALGM,HAL,
Relative Strength 6 Month (6M-RS)
ARDX,AEHR,TGTX,CPRX,SMCI,OII,RIG,ELF,WMG,RCL,FOUR,BAND,ALGM,CPRI,YY,INSW,VAL,HLIT,IGT,ARRY,
REFERENCES
Articles on the system:
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