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) (NEW!)
Economic Calendar
Sectors Review
Alex’s TAKEAWAYS (+gameplan)
Leaders list
Alex’s Portfolio update
LONG Focuslist
SHORT Focuslist (NEW!)
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Alex ✌️🛡️
GENERAL MARKET ANALYSIS ($NQ/$ES levels)
NASDAQ ($NQ) Daily
Today, NQ had a nice run pre-market again like yesterday and sold off right at the open just like last Friday. It managed to still close green, but still below the 11253$ range top and below the 21dma as well. NFLX earnings came in hot AMO (aftermarket open) and that caused the futures to rally above the 11253$ level & 21dma. We’ll have to see where we open tomorrow.
Tomorrow, I would like to see a close above the 21dma and also above the 11253/11285$ area. If we can hold there and build a couple of tight actions, that would be really ideal. We also have to look for the 11534$ level that can act as potential resistance tomorrow, that would be a +1.65% move. If we rejected the 21dma again tomorrow with a lower high, then we could see a rollover situation.
$NQ levels on the upside (resistance)
11534$ level (Sept. structure)
the 21dma
$NQ levels on the downside (support)
11253$ level (recent swing low)
11285$ level
10845/10890$ area (2020 structure / June low)
11068$ level (3 Oct. low)
10656$ level (2020 structure)
10484$ (Oct 13th low)
S&P500 ($ES) Daily
$ES levels on the upside (resistance)
3735/3780$ area
the 50dma
$ES levels on the downside (support)
3639$ last week swing low pivot
3596$ level (2020 structure)
3509$ level (2020 structure)
3388$ level (2020 structure)
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MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - Pretty flat day @ -75.
20dma @ -461 (⬆️)
NYAD (Net Adv/Decl) - Still positive but came down a bit. Trend is up
20dma @ -394(⬆️)
MCOSINYA (McClellan Oscillator) - McClellan continues on the upside @ +119 and the trend continues to pick up speed.
20dma @ -137 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - LT breadth with a gap up right above the 50dma, confirming the multi-month wedge DTL breakout. This is very constructive seeing the LT breadth breaking out like that.
MMFI (Stocks > 50dma - MT breadth) - MT breadth a bit less powerful move as we’re still below the 50dma, but still a wedge DTL breakout here as well.
MMTW (Stocks > 20dma - ST breadth) - ST breadth was super strong again today with a gap up near the oversold area, but faded all day and closes near its lows. The trend is up, but a bit extended already.
VIX (Volatility S&P 500)- VIX is still trending down with another 5/10dma rejection. We closed below the recent channel DTL, which COULD indicate a possible rally as we need that VIX trending down as an indication of the market going higher.
DXY (US $) - Was not able to rally from the 21dma today and got rejected at the 5/10dma too. I will be looking at that multi-month UTL that we might retest tomorrow or the day after. If we bounce it’s no bueno, and if we break below it will be another fuel for a market rally IMO.
US10Y (US 10Y bond yield) - Now this is AGAIN the divergence I am seeing and why I remain careful and see a potential risk in this market… the bond market is crashing and yields are going up, which is a headwind for the risk assets in general. Seeing the 10Y breaking out and staying over the 4% level like that again today is a red flag for me. The market didn’t seem to care today, but we’ll have to see if it starts to care soon…
IEI/HYG (Credit Spread) - Confirming the UTL break today, which is super positive.
BTC/USD (Bitcoin) - Bitcoin is still in that consolidation area and getting squeezed now between the DTL & UTL. We’ll have a break soon…but which side I don’t know.
PRIME MODEL SPREADSHEET (PT_database) 🆕
Access to the PT_database 👇
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Sectors Relative Strength - Weekly (RS vs SPY)
Top 3: XLF - PEJ - CIBR
(XLE) Energy - The energy sector is shaping super well above all kma’s after the support area & DTL retest. I like how we hold the 82.07$ level and tightening right below 83.54$. I will be interested to play that sector with GUSH tomorrow, see the FL.
(XLV) Health Care - XLV big gap up above the 50dma but faded all day to finally close near the lows & the 50dma. We might see a WBPB setup here. As long we stay above that support area I think we’re good.
(PEJ) Leisure & Ent. - Gap up and rejected at the 50dma. We’ll have to see if we can tighten up or follow through on that rejection.
(XLF) Financials - Gap up above the 50dma here as well and close right at it.
(XBI) Biotech - XBI confirmed the DTL wedge breakout…but after a gap up above the 81.75$ pivot & 50dma…we closed below both. This is not the strength I would have liked to see, but let’s wait until tomorrow if we reclaim it.
Alex’s TAKEAWAYS
We are seeing positive action underneath as the breadth is improving with a big breakout on the 50/200 and also the McClellan showing strength, but I still see diverging signals on the indices, with the bond market and also not seeing a lot of high-quality setups in individual names… that keep me on the defensive. That can change quickly, but right now the long setups are failing and I saw a lot of 50dma rejection as well today. This situation can change quickly and I will stay open to any situation, but there are little things missing to see a clear green light and push the pedal.
Our job will be to play the individual names as they present themselves and see if they work. The market will pull us in as we build exposure one day at a time.
Gameplan:
Tomorrow, it will be only using 10% positions and look to enter a maximum of 2 positions in individual names. I don’t want to exceed my 20% max exposure as long the market doesn’t close above the 21dma. The long FL is pretty small tonight as I want more high-quality setups to get engaged, so if energy is not strong tomorrow, I might even not take any trades.
If we get a bounce of the 11253/11285$ area or a retest of the 10dma, I might initiate a small 10% position in TQQQ.
LEADERS LIST
Overall leaders (PRIME Score)
INSW,HLIT,AEHR,PBF,WTI,DEN,APDN,YPF,TNK,STNG,CVI,DINO,NOG,EURN,DO,VAL,PAYO,PR,MPC,MUR,
Fundamental leaders (FA Score)
AMR,HCC,DK,MRO,ERF,DVAX,MGM,DRH,TELL,LBRT,BHF,ENLC,SWAV,TRGP,WTI,HLIT,MPC,FANG,KOS,ARCH,
Technical leaders (TA Score)
AEHR,INSW,TNK,APDN,PBF,NTNX,HLIT,DEN,PAYO,STNG,NAT,EURN,DO,FRO,WTI,RVNC,YPF,UNM,MRSN,VAL,
Relative Strength 1 Month (1M-RS)
APDN,PBF,SVC,CVI,CCRN,NEX,OI,PARR,AGEN,AEHR,HRMY,PSX,STNG,CMC,LBRT,DO,NAT,NTNX,DINO,GNK,
Relative Strength 3 Month (3M-RS)
APDN,YPF,AEHR,INSW,NTNX,WFRD,TNK,RVNC,WTI,DEN,RXDX,XMTR,PBF,FUBO,HLIT,STEM,ZETA,PR,MUR,AZUL,
Relative Strength 6 Month (6M-RS)
AEHR,APDN,INSW,TNK,STNG,YPF,RXDX,HLIT,MRSN,DCPH,ARRY,RVNC,TH,PAYO,WTI,RXRX,PBF,ELF,CPRX,SWIR,
PT PORTFOLIO UPDATE
Did try a couple of names today, like DV CELH & LABU, but they all faded with the market and took me out intraday.
LONG FOCUSLIST 📈
DINO 58.64, GUSH 172.68
DINO
An Oil stock that is tightening very well right above the recent base area that we retested earlier this week. I like the higher-low structure we are building right now as well. I would use the breakout swing high as an entry.
Entry: recent breakout high pivot @ 58.64$
GUSH
I will use GUSH to trade the XLE setup I explained higher.
Entry: recent swing high pivot @ 172.68$
SHORT FOCUSLIST 📉🆕
PRVA 33.2, PL 4.88, AGL 20.81
PRVA
Stronger name recently after a pretty good run, but that break of the 50dma on VOLUME like it was nothing was very telling. We then retested 2 times the 50dma by making lower highs and just broke the recent wedge UTL last Friday.
UPDATE: Tried to reclaim that base area, but got rejected by it today again, so the alert is still active.
Entry: recent swing low pivot @ 33.20$
PL
Was building higher lows in the last few months, until we broke that structure Friday and retested the UTL today and got rejected. This is a WBPB and I would use the Friday’s low for a short entry.
Entry: recent swing low pivot @ 4.88$
AGL
Pretty much the same setup here. Was building higher lows in the last few months, until we broke that structure Oct. 10th and retested the UTL before sliding down and being rejected by the 10dma in the last 3 days. Pressure is down and I would look at the recent swing low for an entry.
Entry: recent swing low pivot @ 20.81$
INDICES trades (SQQQ/TQQQ)
That’s the kind of trade that is hard to plan & explain in advance. I share indices intraday setups & trades each day in the Discord channel if you’re interested to join. (7 days free trial, then 20$/m)
🎖️ = 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
Articles on the system:
I really hope that you enjoyed it. If you did, please share it & hit the LIKE button so that more folks can be reached and this Newsletter can grow. :)
Hey Alex,
You mentioned that "Did try a couple of names today, like DV CELH & LABU, but they all faded with the market and took me out intraday.", but the loss is not recorded in your portfolio screenshot.
Is the Portfolio screenshot only for open trades?
Merci!
Hey Alex,
Can you please do an education article on how you determine and draw your support & resistance levels on the indexes.
Merci!