Alex's daily Market update & Focuslist - 05/30
Another day led by Semis, mega-caps & AI.
Good evening guys,
Enjoy tonight’s letter!
Alex ✌️
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GENERAL MARKET ANALYSIS
NASDAQ (NQ_F) Daily
Price Action Analysis:
NQ gapped up on the debt ceiling news but could not follow through as we closed red from the open. We are now 9.0% above the 50dma, so definitely ST extended.
On rare occasions out of bear markets, we could see a 10-15% extension, so it’s not a sell signal but rather a sign to be cautious with Tech exposure.
We remain in an uptrend, above all kma’s.
RUSSELL 2K growth (IWO) Daily
Price Action Analysis:
As highlighted last week, IWO was in a critical area. We did bounce from the 10/21c + 72/89c and reclaimed all kma’s with a nice bounce above the range area.
We tried to breakout from the range area & the 228.49$ level today but failed and closed near the 21dma on above-average volume.
This is certainly not the follow-through we wanted to see on Friday’s reversal, so we’ll have to see if tomorrow we re-attempt a breakout or follow-through down. Which would not be very constructive.
S&P500 (ES_F) Daily
Price Action Analysis:
Failed to hold the gap and retested the 4200$ level but could not bounce decisively. We could see a BORS setup developing on that level retest.
We don’t want to see a high-level breakdown from here but rather a bounce and reclaim of today’s high pivot.
PT_UL BREADTH & INTERNALS
Price closed positive & still ABOVE all kma’s.
Breadth was positive with a very high UP volume, but participation narrowed again today at -7% DOWN day.
MSCI downtrend + BELOW 10dma.
3.4x daily momentum. (good but weakening)
NNH at +16 (10th in a row)
The market model is still on an ORANGE signal (🟧)
Bottomline: The strength continues in some narrow AI & semis leadership while we remain weak under the hood and chopping around.
Internals
Muted action today but still rejected the 10/21c. No red flags here.
MOVE (Merrill Lynch Option Volatility Estimate - Bond market volatility)
Reversal.
5/10dma break today as we came back in the 3.71% level. Can we find support at the 10/21c?
Reversal and reclaimed the previous swing low pivot, but we are still below the 72/89c, so it could be a retest & rejection.
Failed at the recent swing high pivot and close below the 5dma.
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 - will look for PB & kma’s to catch up
XLK Technology: ST extended - will look for PB & kma’s to catch up
IGV Software: ST extended - look for a retest of the previous swing high pivot.
CIBR Cybersecurity: Failed to hold the gap, and it looks like a potential PB is underway. Was ST extended so it would be healthy.
FDN Internet: Retest of the 154.88$ base level and held — potential BORS.
Sectors potential playable setups :
ITB Home Builders: Recent leader that pulled back right at the recent base area. We are building a higher low that could lead to a bounce and trend resumption.
TAN Solar: On watch for me this week as we're building that tight wedge at the 10/21c and Low & gap AVWAP pinch just below the ST DTL. Failed breakout today, maybe we can get a re-attempt tomorrow.
XBI Biotech: Recent leader that consolidates the recent move and now retesting the breakout AVWAP & 72/89c. On watch but need to tighten more in the next few days.
XLY Consumer discretionary: Followed through on volume on the breakout and found resistance at the 153.93$ level but held the recent swing high pivot.
ROBO Robotics & Automation: Followed through on volume on the breakout and found resistance at the 55.74$ level but held the recent swing high pivot.
Lagging sectors :
GDX Gold miners: Solid downtrend below all kma’s.
XLE Energy: Gapped down to retest the base area. We held, but the downtrend remains strong, and we could not fill the gap.
XME Metals & Mining: Solid downtrend below all kma’s.
XLV Healthcare: Solid downtrend below all kma’s.
XRT Retail: Possible U&R setup with a retest of the 58.21$ level today, creating an HL. If we can reclaim the 59.26$ level and 10/21c, we have something going on.
FOCUS & LEADERS LIST
ARRY (WBPB) - Alert: 23.78, SL: 22.01 / LOD
TAN sector is still within the wedge after today’s failed breakout, but still on watch. ARRY retested and bounced at the 21dma today and continues to build below the entry pivot.
CRSP (BO10PB) - Alert: 65.5, SL: 62.75 / LOD
Tried to reclaim both AVWAP today, but failed to hold on to sector & market weakness. We did hold the 10/21c and the UTL. This is shaping great at the 10dma with higher lows while the XBI sector is trying to turnaround.
AMAM (BORL) - Alert: 15.09, SL: 13.57 / LOD
XBI sector is one to watch as many interesting setups are forming up. AMAM is a recent leading & high ADR biotech that broke out of the base and consolidated above the 10dma in the last few days. We are creating an ascending VCP, and momentum could build if we reclaim the 15.09$ pivot. Be aware that this is a riskier play due to high ADR (Average Daily Range) and clinical stage stock (overnight risk).
TEX (WB) - Alert: 48.45, SL: 47.4 / LOD
Building a wedge with higher lows and a great volume profile right at the squeezed 10/21c & 72/89c. DTL breakout could also be used for an entry.
LEADERS LIST
Overall leaders (PRIME Score)
IMGN,AMAM,APP,SDGR,DUOL,ACVA,SHOP,MDB,ELF,RMBS,ASAN,CELH,NVDA,HUBS,MAXN,EXAS,TGTX,STNE,APLS,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,AMAM,PLTR,NVDA,APP,SDGR,RMBS,ASAN,DUOL,ELF,ACVA,TGTX,MDB,PRG,S,HUBS,ACLS,CRWD,SHOP,
Relative Strength 1 Month (1M-RS)
SMCI,PLTR,IMGN,NVDA,RMBS,MCB,ENTG,NET,VRT,COHR,ACLS,SDGR,ASAN,ZS,AMAM,ANET,MNDY,AEHR,PSTG,APP,
Relative Strength 3 Month (3M-RS)
IMGN,SMCI,AMAM,PLTR,APP,NVDA,DUOL,MAXN,TGTX,SDGR,ASAN,RMBS,STNE,SWAV,SHOP,ELF,ACVA,MDB,CELH,PRG,
Relative Strength 6 Month (6M-RS)
AMAM,IMGN,SMCI,PLTR,NVDA,TGTX,APP,DUOL,SDGR,RMBS,MAXN,ACVA,ELF,MDB,ASAN,PRG,SHOP,APLS,EXAS,ACLS,
Alex’s TAKEAWAYS & GAMEPLAN
Pretty mixed action today on the debt ceiling deal news. Many stocks have seen strong opens, only to be faded and sold into.
That’s not the action we wanted to see today, but let’s see if we follow through tomorrow. Indices & breadth is at an important area, and the next few days will be important.
It’s only Monday, and the trend remains UP. But there is some red flags.
Here are couples of things I’ll watch tomorrow:
The debt ceiling deal is done. How is the market react to the news?
GAP & FADE - RED FLAG
NQ could not hold the gap, and now 9% from the 50dma.
ES could not hold the gap either and retested the 4200$ level. Critical spot tomorrow.
IWO rejected at the 228.49$ base level. RED FLAG.
The open strength got sold into this morning, and we were unable to bounce convincingly. A lot of failed breakouts - RED FLAG.
Breadth was weak under the surface today, mainly lifted by mega-caps, semis, and AI stocks.
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, but VIX & Credit Spreads show constructive action here.
Economic news/events:
GAME PLAN:
Exposure model = ORANGE signal (🟧)
Still only playing pilot positions until the market improves to a YELLOW or GREEN signal.
I’ll continue to follow my open heat & progressive exposure to dictate new positions.
I will begin to be more defensive as, despite the indices & some niche stocks showing big moves lately, the stocks fitting my system are still not ready to run and are only chopping around.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
PRIME MODEL SPREADSHEET (PT_database)
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REFERENCES
Articles on the system:
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