Good evening traders! 👋
What we’ll cover in the Newsletter tonight:
General market analysis ($NQ/$ES levels)
Market Breadth & Internals (Risk model)
Prime Model spreadsheet (PT_database)
Economic Calendar
Sectors Review
Alex’s TAKEAWAYS (+Gameplan)
Leaders list
Alex’s Portfolio update
LONG Focuslist
SHORT Focuslist
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Alex ✌️🛡️
GENERAL MARKET ANALYSIS ($NQ/$ES levels)
NASDAQ ($NQ) Weekly
NASDAQ ($NQ) Daily
Friday, NQ and the main indices had an IBD Follow Through Day (FTD). It was looking to be yet another down day pre-market, until the FED news about a possible slow-down in the rate hikes and ALSO the MoF/BoJ intervention on the JPY currency affected the market on the upside. NQ finally had big swings, before pushing higher and close above the 11253$ level, bull flag DTL & the 21dma.
Tomorrow, this is certainly a very positive action and a good first step in the right direction, but I want to see the market hold this 11253$ & 21dma tomorrow and ideally push above 11534$ to really confirm that reversal.
$NQ levels on the upside (resistance)
11534$ level (Sept. structure)
11689/11794$ area (May/June/July structure)
the 50dma (!!)
$NQ levels on the downside (support)
11253$ level (recent swing low)
11068$ level (3 Oct. low)
10845/10890$ area (2020 structure / June low)
S&P500 ($ES) Weekly
S&P500 ($ES) Daily
$ES levels on the upside (resistance)
3780$ area
3855/3903$ area (May/June/July structure)
the 50dma
$ES levels on the downside (support)
3735$ level
3639$ last week swing low pivot
3596$ level (2020 structure)
3509$ level (2020 structure)
3388$ level (2020 structure)
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - acceleration on the downside again @ -508. Honestly, I’m a bit surprised by this reading for an FTD… I always take NNH/NNL with a grain of salt at reversal. Takes some time for stocks in an overall oversold condition to reach a new 1M or 52W high. I think it might lag a bit here, but a bit disappointed.
20dma @ -411(⬆️)
NYAD (Net Adv/Decl) - We got a positive reading Friday, but for an FTD, I find that the participation was not high enough. An FTD should feel overwhelming with broad participation, with only 1318 advances, I don’t feel that. I’ll give it a chance, but let’s say that it will have to prove itself…which might be a good thing after all ;)
20dma @ -175 (⬆️)
MCOSINYA (McClellan Oscillator) - McClellan back positive @ 72. Let’s see if we can follow through this time.
20dma @ -87 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - LT breadth just confirmed the WBPB setup on the kma’s retest and almost reclaimed the recent swing high 26.87% pivot. This is good action.
MMFI (Stocks > 50dma - MT breadth) - MT breadth just confirmed the WBPB setup on the kma’s retest and almost reclaimed the recent swing high pivot. This is a good action, but now sitting at the 50dma.
MMTW (Stocks > 20dma - ST breadth) - ST breadth finding support at the recent 49.43% pivot. This was a very logical place to bounce. Now back above all kma’s.
VIX (Volatility S&P 500)- VIX continues to trend lower and is now below 30$ AND the 21dma.
DXY (US $) - US$ correlation with the market continue to be very high. Friday we reversed at the wedge DTL and closed below the 21dma. The thing is that the US$ seems to be very much impacted by the BoJ/MoF Yen interventions… so I don’t know what to think of that reversal on Friday. I guess we’ll have to see tomorrow.
US10Y/TNX (US 10Y bond yield) - The 10Y continued to trend higher in an almost climatic type of move Friday. It finally came down heavily on the FED news and now this might even look at a climatic top. If this is the case, this could be really good for the equity market.
IEI/HYG (Credit Spread) - Also positive action on the Credit Spread as we gapped up at the 50dma before rejecting it heavily to close below the 1.56$ recent swing low pivot.
BTC/USD (Bitcoin) - Bitcoin retested the 18669$ base level Friday before jumping back up to the kma’s by EOD. On Sunday, we just broke out of the recent wedge consolidation with the DTL breakout. This is looking promising, but now need to b/o of that 50dma and base area.
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Sectors Relative Strength - Weekly (RS vs SPY)
Top 3: XLE- XME - SMH
(XLE) Energy - The energy sector with a big breakout Friday. We were able to push & close above the 85.18$ base pivot. Let’s see if we can follow through Monday, but right now it looks like 90.46$ could be the next target.
(XME) Metals & Mining - XME was the strongest sector on Friday and the chart looks very promising. We broke out of a WBPB setup with the retest of kma’s and base area. We are now above the 50dma and the volume profile looks A+.
(XBI) Biotech - XBI was not able to confirm the breakdown and we just got back into the base area. Still have a lot of work to do, but if we can reclaim the kma’s and the DTL…we would have a chance of some upside here IMO.
(SMH) Semiconductors - SMH acted constructively Friday as we broke that recent DTL and confirmed the longer channel breakout as well…but we are still below all resistance areas & the 21dma. A lot of work & potential resistance ahead. This is such an important sector for the general market health that I’ll be tracking it daily.
(XLF) Financials - Confirmed the WBPB bounce, now we need to see if we can retake the 50dma & 32.46$ recent swing high pivot
(FDN) Internet - FDN was not able to follow through on Thursday's DTL rejection and instead broke out of the DTL again and closed above it. We are now sitting just below the 50dma, so this will be a good test in the next few days.
(IGV) Software - We broke out of that channel DTL Friday and closed above the 21dma, which is very very positive. We still need to reclaim that base area and the 50dma, but this is going in the right direction.
Alex’s TAKEAWAYS
Despite the fact that we had a very positive day Friday, along with it being an FTD…I still remain cautious with so many mixed signals in the internals (NNL & low advances, etc), at the macro level, AND the fact that Friday was OPEX as well. That I can’t control and our job is to focus & follow the price action. I will want to see some follow-through or at least see things holding tomorrow in the first hour of trading before jumping in and testing the waters. That being said, the sectors chart & many other indicators do look bullish, so we’ll have to trust the reversal and see where we go, day by day.
Gameplan:
Friday’s action was quite positive with a close above the 21dma, which triggered my 20% long exposure rule. I begin to see more interesting long setups as well, which was not the case last week…so for me, I’ll switch to an INDIVIDUAL STOCKS focus going forward if the indices hold these levels. I will also begin very slowly tomorrow with probably a 2 x 5% position to test the market, then if I gain traction I will try to add 2 more to get to my 20% desired exposure. It will be super important to use progressive exposure.
If we get a gap up of more than 1%, I will also wait until after the 30min to buy the first position. I don’t want to get caught in a Monday morning gap up & fade as we had lately…
LEADERS LIST
Overall leaders (PRIME Score)
WTI,PBF,CVI,AEHR,DEN,YPF,CCRN,INSW,HLIT,PR,MUR,NOG,ERF,MTDR,DO,FANG,DVN,MRO,DINO,MPC,
Fundamental leaders (FA Score)
AMR,HCC,MRO,ERF,DVAX,MGM,DRH,TELL,BHF,ENLC,SWAV,TRGP,WTI,HLIT,DK,MPC,FANG,KOS,ARCH,PR,
Technical leaders (TA Score)
AEHR,CVI,WTI,PBF,PARR,CCRN,YPF,DEN,MUR,INSW,DO,PR,MTDR,SLB,NOG,APDN,TNK,HLIT,NOV,DVN,
Relative Strength 1 Month (1M-RS)
APDN,NEX,AEHR,PARR,CVI,PR,SVC,SLB,PUMP,XPRO,MUR,NOV,HAL,MTDR,DO,PBF,HCC,WTI,MRO,STLD,
Relative Strength 3 Month (3M-RS)
APDN,YPF,WFRD,WTI,INSW,AEHR,NTNX,XPRO,DEN,PBF,TNK,DO,PR,AZUL,MUR,PARR,CVI,XMTR,RVNC,NOV,
Relative Strength 6 Month (6M-RS)
AEHR,STNG,ARRY,TNK,INSW,MRSN,RXRX,RXDX,CVI,TH,CCRN,STKL,SWIR,PAYO,ELF,HLIT,YPF,CPRX,PBF,PDD,
PT PORTFOLIO UPDATE
I am working on a table that resumes my intraday closed positions as well to clearly show my intraday operations so that you folks can learn from it. Stay tuned, I’ll probably finish it up this wknd.
LONG FOCUSLIST 📈
AMR 160.47+DTL, ELF 41.91, AHCO 22.06+DTL, SWAV 279.97+DTL, STKL 10.11, YPF 7.28, XMTR 56.12,
AMR
The Coal sector is very strong and AMR is a name that I like the larger base developing. I would use the DTL to trigger that setup with the recent swing high as an alternate entry. This is really a commodity play here with this name.
Entry: recent swing high pivot @ 160.47$ + DTL
ELF
ELF tried to breakout last week, before going back in the base and finding support at the 10dma. We reclaimed that base area Friday, which I consider to be a BORS setup that we could confirm with the initial breakout swing high pivot. I also like the volume profile of the past few days, clearly, accumulation is going on.
Entry: initial breakout swing high pivot @ 41.91$
AHCO
A name that had a big 130% run from the lows, before losing 35% on the last ER. I like the way we built a clear VCP action around the kma’s and now living above the 50dma. I would use the DTL & recent swing high for an entry.
Entry: recent swing high pivot @ 22.06$ + DTL
SWAV 🎖️
This one doesn’t need a presentation… been a regular in here. We are still building very tight action in that base area and just below the DTL. We will break one side or the other…I would use the recent swing high or DTL for an entry here as well.
Entry: recent swing high pivot @ 279.97$ + DTL
STKL
Another name that I follow for quite some time, but now I really like the tight consolidation we are building right now at the kma’s. I see higher lows and now a nice 50dma rejection/bounce Friday. I would use the first breakout high as an entry pivot.
Entry: breakout high pivot @ 26.40$
YPF 🎖️
Super strong sector ($XOP/$XLE) and one of the strongest names of the last 6 months building an HTF with higher lows at the 21dma. I love those setups… I would use the 7.28$ base pivot for an entry on the breakout.
Entry: base high pivot @ 7.28$
XMTR
Relative strength in the first few weeks of the current leg down was absolutely crazy and now we see a very strong XME sector that might push & follow through this week. I like how we retested and rejected the 50dma, but with a lower low (small red flag. We are sitting at the 21dma and a close above and the recent swing high would be a very low-risk entry, low in the base IMO. Worth a shot in a name that showed incredible RS recently.
Entry: recent swing high pivot @ 56.12$
SHORT FOCUSLIST 📉
🎖️ = 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.
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REFERENCES
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