Alex's daily Market update & Focuslist - 12/08
The market bouncing in front of PPI data!
Good evening folks!
Let’s get ready for another daily Newsletter. If you could like & share it on Twitter, I would highly appreciate the help!
Alex ✌️
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
* Glitch in TradingView with the contract change - that gap up is not real
Price Action Analysis:
Today, we could not follow through down, and we were able to have an excellent reaction to job data pre-market to push ES_F right at the 3964$ resistance level. We sold off at the open but reclaimed it soon after…only to chop in a volatile range for the rest of the trading day.
Overall, I like that we reclaimed and closed above the 3964$ level and the 21dma…but we have much work to do, especially with important news almost every day for the next week or so.
On the upside,
We’ll have the 10dma that could act as resistance tomorrow, but I doubt we will go as far as retesting the next resistance level, 4016$.
On the downside,
3964$ level & 21dma that we just broke are the next very close potential support tomorrow. If we can’t hold there, the 3903$ level & area is my next target on the downside.
If we can’t hold that level, the 50dma is the next logical support within reach.
NASDAQ (NQ_F) Daily
* Glitch in TradingView with the contract change - that gap is not real
RUSSELL 2K (RTY_F) Daily
Alex’s TAKEAWAYS
Today we chopped again, but we bounced and closed above critical technical levels.
I don’t know how far this bounce could go, especially with tomorrow’s PPI, next week's CPI, FOMC & important quad witching week…we might very well chop around these levels waiting for the FED next week. (between 3903 and 3964$)
One thing is sure, this current rally is really under pressure, and I am cautious with any new long exposure. If we do rollover it could go very fast.
Some observations:
ES_F above 3964$ level & 21dma, but just retesting resistance area.
Overall, we saw good action in the leading names (RS list)
VIX failed breakout and undercut the 21dma - good
DXY 105$ rejection - good
Breadth improved a bit today - but overall weak.
Leading sectors SMH & XLV acted GOOD, but it’s a mixed bag, and some sectors are at risk. This is not a large participation.
Market health & Trend indicators:
LT SIGNAL: downtrend (red) + below 50dma = BEAR market (🟥)
MT SIGNAL: downtrend (red) + above 10dma = RALLY under pressure (🟨)
Tomorrow's economic news:
Gameplan:
Tomorrow, the game plan will be to recognize QUICKLY if we have a RANGE day or TREND day. PPI tomorrow morning might move the market one way or the other so that we might get some trending market from the start, but I am not sure we will move that much with CPI Monday morning.
If we get an upside TREND day, I might add some exposure, but I will make sure to respect my progressive exposure and trim a good part at EOD to finance the risk.
If we get a downside TREND day, I will close my only long position and go into the weekend with 100% cash before CPI Monday morning before the market open.
If we have a RANGE day, I will only manage my current open positions and stay on the sidelines to not get hurt in the chop & volatility.
One last thing, if you carry exposure over the weekend, make sure you have enough cushion and trim some to finance the CPI gap risk at the open Monday.
LONG FOCUSLIST
CPRX 17.22, ELF 55.66, GFS 62.95, ARRY 21.48, KGC 4.35,
CPRX 0.00%↑
Still building nicely above the 21dma, and we just created a higher low today with a possible 3-day mini-channel breakout.
UPDATE: It could not follow through on the gap-up but held the 10dma. The setup is still valid for tomorrow.
ELF 0.00%↑
Still pulling back at the 10dma and nearly broke the DTL today. We are building higher lows, and we want to see that UTL hold. Otherwise, it will be a rollover candidate. It makes or breaks tomorrow…
UPDATE: We gapped up above the DTL but could not push here too. The setup is still valid for tomorrow.
GFS 0.00%↑
A bit volatile recent IPO, but great fundamentals, and at a very low-risk area on the retest of the base area. We also broke the consolidation wedge DTL today and closed right at the 10/21dma. Notice the volume profile in the wedge…perfect.
ARRY 0.00%↑
Another young IPO is setting up well on the retest of the base area and 21dma. We worked two channels down with higher lows and declining volume. This is another one that could be volatile with an ADR of 7.66%, but with a tight entry it could have high potential.
KGC 0.00%↑
Gold miners have been the highest-performing sector of the last month, so it has my attention when a name in the leading sector is set up. KGC is working two channels to the 21dma and on higher lows. We broke the latest channel today on the DTL b/o, and I would use the most recent swing high pivot for an entry.
SECTORS PERFORMANCE
Leading sectors
(XLV) Healthcare - Followed through on the base area & 10dma bounce. We are approaching recent swing high pivot.
(SMH) Semiconductors - We bounced from the 21dma this morning and broke out of the recent consolidation DTL right back into the support area. Also, notice the volume profile with the volume increasing on b/o today.
(TAN) Solar - It could not follow through on yesterday’s 77.73$ level bounce, and we got rejected at the 21dma once again. Looks pretty weak to me.
(XME) Metals & Mining - Failed to rally from the support area for the 3rd day in a row and created a lower structure high. We might break that UTL lower tomorrow.
Sectors on watch:
(XLE) Energy - rejected at the 50dma retest… looks like it’s going lower.
(XBI) Biotech - Bounce from the UTL again and closed near the 81.75$ level. This is too much chop and indecision. We have to wait.
(IGV) Software - found support and higher low at the base area bottom level. Looking good, and I see a lower timeframe inverse H&S. Looking good, but it needs to follow through to confirm it.
(XLF) Financial - Getting super tight in the support area right below the 21dma. It makes or breaks tomorrow…
MARKET BREADTH & INTERNALS
$USHL (Cumulative new 52W Highs/Lows & 50dma)
LT SIGNAL: downtrend (red) + below 50dma = BEAR market (🟥)
!MCSUMNYA (McClellan summation index & 10dma)
MT SIGNAL: downtrend (red) + above 10dma = RALLY under pressure (🟨)
NYHL (New 52W Highs/Lows) - Stayed negative
NYAD (Net Adv/Decl) - Flat today.
MMFI (Stocks > 50dma - MT breadth) - Still below the 21dma and downtrend.
VIX (Volatility S&P 500) - Failed pivot breakout and 21dma rejection. It might indicate some pressure off the market tomorrow, but the news will dictate the direction.
DXY/TNX (US$) - It could not bounce off the support area, and now it looks like a short BORS setup on that base area rejection. US$ down has been good for equities recently.
US10Y/TNX (US 10Y bond yield) - 10Y yields bounce off the 3.5% support area and could really bounce here if we follow through and confirm the WB tomorrow.
ECONOMIC & EARNINGS CALENDAR
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
AEHR,PDD,BAND,ELF,YMM,GPS,LSCC,IGT,ALGM,NTNX,RLX,GMAB,RCUS,PFGC,CPRX,VIPS,SMCI,CELH,TMHC,WFRD,
Fundamental leaders (FA Score)
NOG,PSX,FRO,PR,ESTE,CALM,PDCE,RUN,MUR,HGV,HP,ERF,GFS,STNG,JXN,LBRT,DVAX,SPWR,PDD,CEIX,
Technical leaders (TA Score)
RLX,BAND,GPS,SLVM,AEHR,PDD,NTNX,ALGM,LSCC,ELF,YMM,IGT,RCUS,VIPS,GMAB,CHWY,CPRI,CPRX,TMHC,CELH,
Relative Strength 1 Month (1M-RS)
RLX,IQ,XPEV,BZ,YMM,VIPS,TGTX,PDD,JD,LI,APPS,BIDU,CELH,BAND,MNDY,SHLS,SABR,ZLAB,SLVM,CPRI,
Relative Strength 3 Month (3M-RS)
RLX,PRTA,AEHR,BAND,GPS,SLVM,ELF,WFRD,ALGM,BIIB,NTNX,VCYT,IGT,PDD,LSCC,SMCI,YMM,SMPL,SLB,AER,
Relative Strength 6 Month (6M-RS)
AEHR,PRTA,RLX,ELF,NTNX,CPRX,GPS,BAND,SMCI,VCYT,SLVM,INSW,BIIB,ALGM,PDD,CCRN,LSCC,WFRD,GMAB,CELH,
The PrimeTrading community is on DISCORD! 🗨️
We are now over 160 traders in the DISCORD channel!
Join us if you want to see how I execute the trading plan intraday, follow my live trades, and have direct access to a fantastic community!!
Alex’s live trades & market commentary
Education & mentoring
Trade side-by-side with me
Discuss trade ideas with a like-minded community
Macro Economy, Crypto & more!
Staying on the right side of the market with a risk management approach first.
IMPORTANT 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
STOP LOSS:
Recent swing low pivot
For less active trading, you can use the recent swing low pivot as a good structure level to place your SL, but consider that the distance with the entry is more significant. You need to adjust your position size to keep the trade risk as a % of your portfolio, ideally below 0.5% or even 0.25% when the market conditions are imperfect.
LOD (Low Of Day) / HOD (High Of Day)
I like to use the LOD of the day I enter the trade. This way, I can use a larger position for the same trade risk as a % of my portfolio. BUT requires more active trade management and expects to be taken out more often (lower hit rate).
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 more considerable loss. Please study all my education articles closely to learn how I handle trades around these entry pivots.
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. :)
thanks Alex,
always precious tips
Have a great weekend !
Hi Alex,
How do you quickly assess a trend or range day ? Which timeframe are you using ? 5 min chart ?