Alex's daily Market update & Focuslist - 12/21
The bounce followed through today! 2 days left before Xmas 🎅🎄
Good evening folks!
Today, we followed through on yesterday’s reversal…do we still have fuel in the tank?? Let’s find out!
Alex ✌️
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GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Price Action Analysis:
/ES was powerful right off the gate and rallied hard at the open. We pushed above the 3900$ level and then consolidate for the rest of the day. A retest and false break of that 3900$ level before the close sparked a rally to close strong and continue on the futures.
It’s now day #2 of that bounce, and we’re sitting right at the 50 & 10dma, so this will be VERY interesting to see how we react at these levels tomorrow.
We are still below ALL KMA’S and in a downtrend, so be careful on the long side until we confirm an actual trend change, with AT LEAST a higher low on /ES. Until then, I will look for key levels rejection as a possible rollover scenario.
On the upside,
The 10/21/50dma could act as potential resistance tomorrow if we continue further.
If we push tomorrow, I’m watching the 3964$ area for a potential resistance level closely.
On the downside,
Now, the 3898/3855$ area is acting as potential support going forward.
NASDAQ (NQ_F) Daily
RUSSELL 2K (RTY_F) Daily
Alex’s TAKEAWAYS
The market is still unhealthy and downtrend with the breadth that continues to be weak…But we saw a good push today and interesting action in leading sectors and individual names.
Keep in mind, though… One day is NOT a trend.
So if you play the long side, be careful with your exposure (progressive and total exposure along open heat). This is still a market to take profit quickly, as today proved once again.
Also, we approach holidays with only TWO trading days until Christmas, so you can expect liquidity to decrease considerably until Friday. We either see more volatile moves or a very choppy market. Having that in mind, I don’t think we’re in a market to be aggressive, and one should stay defensive, especially with the overnight exposure.
Time to take it easy, study, do some year-end post-trade analysis, and prepare for 2023.
Some observations:
The market just had an excellent follow-through day and above a critical support area…but we’ll have many key levels as potential resistance ahead too.
Many sectors followed through on their 50dma bounce, but a lot of overhead resistance too.
Breadth remains negative and deteriorating, but we still had a good push today. But we’ll need more than one day to reverse that trend.
VIX & DXY (US$) are acting constructive
Market health & Trend indicators:
LT SIGNAL: downtrend (red) + BELOW 50dma = BEAR market (🟥)
MT SIGNAL: downtrend (red) + BELOW 10dma = Downtrend (🟥)
Tomorrow's economic news:
Gameplan:
We did see the first reversal to consider a potential bounce/ relief rally, so that I will trade a few names long, but only intraday, and certainly not keep exposure overnight. (day trades)
That reaction bounce should also offer an opportunity to add to my existing short positions (SPXS+Ind names). In the next few days, I will look at the 3964$ level very closely for a possible retest & rejection (BORS)
Until then, it’s sitting on my hands and waiting for a better R/R spot to engage in swing or position trades. We’re in no man’s land right now.
In the following sections of tonight’s letter, I’ll cover essential parts of my daily routine & preparation for tomorrow’s trading session.
✅ 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)
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