Alex's daily Market update & Focuslist - 01/22
Solid market bounce Friday, adding conviction to the "healthy" pullback thesis (FREE edition)
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Alex ✌️🙏
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Price Action Analysis:
The market finds support at the expected 3898/3918$ area and rally hard on Friday.
ES_F opened with a gap up, made a higher low, and never looked back, as it was trending all day and on solid volume. We finally closed at the highs, above all kma’s, and above 3964 & 3973$ important levels.
After the last weeks of strong breadth, we were looking at clues that this pullback was “healthy” and the uptrend would resume…well Friday’s action was a very good first step in that direction. The only thing about Friday’s action is that it was OPEX day, so I still want to see tomorrow’s action before concluding anything on this current market bounce.
Overall, this is very constructive and adds a lot of conviction to the thesis that the market is improving and possibly a bull market is developing. (I’m not talking about a multi-year bull, only a bull trend until we get bearish signals)
On the upside,
We are back in the resistance area now, and I’ll be looking at the 4016$ level for potential resistance.
We also must look closely at the bear market DTL, which should be around 4025$ tomorrow. This would be a BIG breakout to confirm the upside bias.
On the downside,
The 3973/3964$ area will be important to hold tomorrow.
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
✅ PRIME_LIST (top 5 potential TML’s)
✅ 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)
Tonight, I offer the premium Newsletter for free to all subscribers. If you like the content and think this can help bring your trading to the next level by offering you a clear full market picture, along with the best R/R setups for swing or position trades right in your mailbox, then make sure to subscribe !!
Alex’s TAKEAWAYS
Pretty amazing how ONE day can change everything…
With that bounce off the 3898/3918$ area, and most importantly, the strength at which the buyers stepped in to bring this market back above key levels and all kma’s… this adds A LOT of conviction to the bull market developing thesis.
We have to take it one day at a time and see if we can follow through tomorrow (Friday was OPEX). Still, I look forward to seeing individual stocks setting up and trends strengthening to enable us to swing for a longer timeframe and get aggressive in the coming days/weeks.
Some observations:
ES_F BOUNCED at the 3898/3918$ area and closed strong above ALL kma’s.
Breadth bounced as well and regained some momentum.
Leading names find support at the 10/21dma. This is constructive action.
VIX is now below all kma’s, but still above 18.50/19.50$ area.
DXY (US$) - rejected at the 10dma and pushing lower
My MT_SIGNAL (McClellan sum. index & 10dma) is in CONFIRMED UPTREND.
My LT_SIGNAL (Cumulative new 52W H/L & 50dma) CROSSED the 50dma and confirmed a BULL market signal.
We begin to see more & more quality setups & good pullback buys in leading names.
Market health & Trend indicators:
LT_SIGNAL: uptrend (black) + ABOVE 50dma = BULL market developing (🟩)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = UPTREND (🟩)
Tomorrow's economic news/events:
GAME PLAN:
As previously said, this strong bounce adds a lot of conviction to my healthy pullback thesis. With that in mind, I will build back my long exposure daily as we get confirmation of our position’s behavior and the profit cushion we build.
Tomorrow I want to see the open and probably wait a bit to see if Friday’s action was due to OPEX. If we get support and positive action, I will build up my exposure where my Model(s) allows me.
EXPOSURE MODEL:
PRIME_LIST (NEW)
I firmly believe that what is high tend to go higher, and for a stock to make a multi-fold move, it has to make a series of new 52w high. Therefore, trading leading names is part of my identity as a trader.
I am always looking at and watching those high-RS and leading names as potential True Market Leaders. (TML)
Starting this week, I want to keep track of my top-5 high conviction names in the market and look for pullback and consolidation to position and add to these names. Obviously, this top-5 will evolve if the price action of a particular stock does not act as planned and a new name shows more potential.
So daily, I will track these names, do some fundamentals research in this section, and might start pilot positions as I did on Friday in AEHR, SHLS & CPRX, even if they’re not in the FL with a defined entry pivot.
I hope you’ll like it ✌️
FOCUSLIST (LONG)
SEAS 59.24, APA 46.14, FLYW 26.52, CPRI 64.38, SPLK 91.36, ONON 21.41, YY 38.96,
SEAS - Alert: 59.24, SL: 55.77
Still building the stage 1 base retest pullback. We found support at the 21dma on a higher low today.
APA - Alert: 46.14, SL: 43.36
If the energy sector is trying to breakout from that base tomorrow, APA could be one to watch on this long retest of the base area. We made another higher low today, just below the DTL. Tomorrow is ex-div, so this might affect the PA.
FLYW - Alert: 26.52, SL: 24.43
Still building nicely above the 21dma since last month’s WB. We touched back the 24.50$ base area & 21dma last Thursday and bounced strongly on Friday. I will be looking at the recent swing high pivot for an entry.
CPRI - Alert: 64.38, SL: 61.2
A very strong and sustained trend for a few weeks now. We are retesting the 21dma and made higher lows on Friday with a new higher high. This trending stock could be an easy hold following the 21dma.
SPLK - Alert: 91.36, SL: 86.25
Multi-month WB, followed by a tight consolidation in the last 2w. We are building nicely at the kma’s and just below the initial DTL breakout swing high pivot.
ONON - Alert: 21.41, SL: 20.19
Also, a name that broke out of a long-term channel and had a pretty nice run in the past 2w to break that DTL. We just found support at the 10dma, and we are looking at a base breakout that would confirm the stage 1 base breakout and retest.
YY - Alert: 38.96, SL: 37.41
A name that broke out of the stage 1 base and built a nice consolidation with higher lows at the 10dma. I will be looking at the DTL & recent swing high pivot breakout to confirm continuation.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
SECTORS PERFORMANCE
Leading sectors:
(XBI) Biotech - We confirmed the 85$ support level bounce on Friday. This is looking very good for the biotech sector.
(GDX) Gold miners - Channel breakout and follow through on the 10dma bounce. The trend is strong.
(XLE) Energy - Back above all kma’s, and seems like it might re-try the multi-month base breakout.
(XME) Metals & Mining - Confirm the 10dma bounce.
(XLV) Healthcare - Still in that channel below all kma’s and refuses to break.
(SMH) Semiconductors - Bounce from the 10dma and reclaim of the 224.85$ base area. Now we need to push above 229.3$ to confirm the upside continuation. This is an important sector to participate in a bull market.
(TAN) Solar - Inside day on Friday did not show much strength, but we are still above all kma’s and held where we had too. We need more confirmation.
MARKET BREADTH & INTERNALS
$NYHL (Cumulative new 52W Highs/Lows & 50dma)
CROSSED the 50dma and confirmed a BULL market developing signal
LT_SIGNAL: uptrend (black) + ABOVE 50dma = BULL market developing (🟩)
!MCSUMNYA (McClellan summation index & 10dma)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = UPTREND (🟩)
$NYMOT (McClellan Oscillator - Breadth extensions)
Breadth bounce, we want to see it follow through.
NYHL (New 52W Highs/Lows) - Still positive since the first trading day of 2023.
NYAD (Net Adv/Decl) - Back positive with a near 2000 breadth thrust.
MMTH (Stocks > 200dma - LT breadth) - Continues to respect price structure with a bounce off recent base support area & 10dma on Friday.
MMFI (Stocks > 50dma - MT breadth) - Big bounce from at the 10dma and back in the overbought area. For reference, if the trend is strong, we can stay in that area for a sustained period. I’ll be looking at the DTL breakout this week to really confirm a strong breadth continuation.
MMTW (Stocks > 20dma - ST breadth) - Support at the 10dma & overbought bottom level.
VIX (Volatility S&P 500) - Rejected at the 21dma retest and now sitting at the 18.50/19.50$ bear market support area. Breaking this area on the downside would be a BIG risk-on signal.
DXY/TNX (US$) - Still below all kma’s and pushing downward.
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
NINE,FOUR,AEHR,ARRY,TGTX,CPRX,OII,SHLS,VAL,ALGM,FRO,RCL,CSIQ,RUN,BAND,PR,H,IGT,MELI,WMG,
Fundamental leaders (FA Score)
NOG,FRO,CALM,PR,LTHM,CPE,RUN,AEHR,HGV,TRIP,GFS,JXN,LBRT,DVAX,CEIX,DK,LNTH,ABNB,PBF,ALB,
Technical leaders (TA Score)
NINE,TGTX,AEHR,ARRY,OII,FOUR,CPRX,ALGM,SHLS,CSIQ,RMBS,MELI,RCL,GPS,VAL,CLF,CPRI,BAND,WMG,UAL,
Relative Strength 1 Month (1M-RS)
AEHR,TGTX,CHPT,CNK,BTTR,NINE,FRO,MELI,UAL,CLVT,ARRY,LTHM,AAL,CSIQ,DKNG,NCLH,EXPE,SHLS,RUN,BLNK,
Relative Strength 3 Month (3M-RS)
NINE,TGTX,BAND,OII,CPRX,AEHR,WMG,ALGM,RMBS,ARRY,CPRI,NLY,FOUR,CSIQ,IGT,TOL,SHLS,GNK,GPS,MELI,
Relative Strength 6 Month (6M-RS)
NINE,AEHR,TGTX,OII,CPRX,ARRY,RMBS,FOUR,RCL,VAL,BAND,ALGM,JXN,SHLS,PR,GPS,WMG,NE,INSW,CPRI,
REFERENCES
Articles on the system:
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