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
Leaders list
Alex’s Portfolio update
LONG Focuslist
SHORT Focuslist (NEW!)
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Alex ✌️🛡️
GENERAL MARKET ANALYSIS ($NQ/$ES levels)
NASDAQ ($NQ) Weekly
NASDAQ ($NQ) Daily
Friday pre-market, we followed through on Thursday's bounce & strength…but as soon the market opened, we got rejected at the 11253$ level and we sold hard all day long to finally close back below the previous structure low @ 10890$.
Those last 2 trading days had a 7.5% range, that’s huge!
Range high @ 11253$
Range low @ 10484$
I will use this range as a RISK-OFF area where the market might remain very volatile and chop around for a couple of days. I want to make sure I don’t get chopped up and get a clearer idea of where this market is heading. After such 2 days range, the probabilities that we get tight action in the next few days are very small IMO.
Let's be patient and let this market come to us. 🛡️
$NQ levels on the upside (resistance)
10845/10890$ area (2020 structure / June low)
11068$ level (3 Oct. low)
11253$ level (recent swing low)
11285$ level
the 5dma
$NQ levels on the downside (support)
10656$ level (2020 structure)
10484$ (Oct 13th low)
10358$ level (2020 structure)
10155$ level (2020 structure)
S&P500 ($ES) Weekly
S&P500 ($ES) Daily
$ES levels on the upside (resistance)
3639$ last week swing low pivot
3735/3780$ area
the 5dma
$ES levels on the downside (support)
3596$ level (2020 structure)
3509$ level (2020 structure)
3388$ level (2020 structure)
This was a FREE preview of my daily Market update & Focuslist letter. In the following sections, I’ll cover important parts of my daily routine & preparation for tomorrow’s trading day that you don’t want to miss!
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MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - With the market opening strong and now making new lows, we had an improvement on the NNH Friday @ -189. We have to be careful with this indicator as we have large indices swings right now.
20dma @ -483 (⬆️)
NYAD (Net Adv/Decl) - Large -1992 read last Friday and confirm the bad breadth on the day. The trend is shifting back down after a couple of days of upward readings. I see higher lows since Sept., selling seems to get weaker.
20dma @ -648 (⬇️)
MCOSINYA (McClellan Oscillator) - McClellan oscillator decreased a bit Friday, but we are still in that consolidation around -100 and we refuse to selloff. This is an interesting divergence as the trend is still going up.
20dma @ -161 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - LT breadth gapped up Friday, but got rejected at the 50dma & resistance area. Not the rejection we want to see, as we close back below all kma’s
MMFI (Stocks > 50dma - MT breadth) - MT got rejected at the 21dma and we closed just below the 10dma. The trend is still down, but we are keeping that support area.
MMTW (Stocks > 20dma - ST breadth) - ST got rejected at the 49.43$ previous structure high and closed back at the 50dma & support area. Not bad action tbh...we’ll have to see if we follow through on the downside here Monday.
VIX (Volatility S&P 500)- VIX was AGAIN telling a different story than the market Friday. We have never been able to spike again and the VIX came back below the 32.21$ pivot & 5dma as $NQ was selling off EOD. This is a very interesting divergence.
DXY (US $) - This is one of the major reasons the market came under pressure Friday again, the US$ bounced from the 10dma and closed higher than Thursday open. As long this one will trend up, we’ll get pressure on the indices & the equity market.
US10Y (US 10Y bond yield) - Another big reason for the market being under pressure is what happening in the bond market right now. The bond market is selling off and the yields have a breakout from their base with a close above 4.0% on the 10Y Friday. BIG headwind and a real RISK.
IEI/HYG (Credit Spread) - Small bounce off the 50dma on the Credit Spread. This is an interesting action as we don’t seem to confirm a move down on the indices here. I monitor a reclaim of the 1.59 level closely.
BTC/USD (Bitcoin) - Bitcoin has been rejected around the 50dma and also the multi-month base top area level. This is not the type of action we want to see in risk assets as well. We are back below all kma’s.
PRIME MODEL SPREADSHEET (PT_database) 🆕
Access to the PT_database 👇
ECONOMIC & EARNINGS CALENDAR
Small week…
SECTORS PERFORMANCE
Sectors Relative Strength - Weekly (RS vs SPY)
Top 3: XLP - XLV - PEJ
(XLE) Energy - The energy sector failed on the retest of the previous swing high and resistance area we are monitoring for a while. The funny thing, Friday was still an inside day, so we’ll have to confirm a break of the Oct. 13th range before knowing the direction, but this rejection certainly doesn’t look too positive.
(XLV) Health Care - XLV managed to hold the 123.90$ pivot and stage 3 base area, which is constructive after last Thursday's reclaim. We’ll have to see how we react to that 50dma rejection though.
(PEJ) Leisure & Ent. - PEJ reclaimed that stage 1 base, but still got rejected at the 21dma Friday. We’ll have to see if we can hold that base area tomorrow.
(XLF) Financials - Financial had a huge reversal and U&R setup last Thursday, but got rejected at the 50dma/base area Friday. We are still in that base and there are chances we make a higher low and get supported in this area. We’ll have to monitor how we handle the next few days.
(XBI) Biotech - Got rejected pretty hard at the 50dma Friday and got back at the stage 1 base bottom area and 77.65$ pivot. If we break that UTL formed by the last 2 swing low, we might see more downside pressure.
Alex’s TAKEAWAYS
Friday reminded us why it’s important to use progressive exposure and that one day is not a trend despite the strength and key level at which a bounce occurs.
That rejection and 2 days-wide range definitely put me on the defensive (100% cash as Friday’s close) and I will really be patient with this market and want to see more constructive & tight action before playing the long side again. Even playing the indices with TQQQ/SQQQ might be tricky due to this elevated volatility and choppiness.
Let this market come to us
LEADERS LIST
Overall leaders (PRIME Score)
WTI,PBF,PR,DEN,MUR,YPF,INSW,TALO,AEHR,MTDR,NOG,MRO,DO,HLIT,VAL,CIVI,PAYO,FANG,APDN,MPC,
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)
APDN,WTI,NTNX,PBF,PR,PAYO,MUR,DEN,YPF,INSW,DO,TALO,MTDR,WFRD,VAL,RVNC,NOG,PCG,CROX,TNK,
Relative Strength 1 Month (1M-RS)
APDN,PBF,PAYO,BTTR,ACVA,PR,HCC,CVI,ARCH,SBLK,PSX,AGEN,SLB,HRMY,EGY,NEX,GOGL,BTU,CMC,OI,
Relative Strength 3 Month (3M-RS)
APDN,YPF,INSW,NTNX,WFRD,WTI,AEHR,TNK,RVNC,RXDX,PR,STEM,DEN,FUBO,MUR,ZETA,XMTR,CPRX,TALO,PBF,
Relative Strength 6 Month (6M-RS)
APDN,INSW,YPF,TNK,AEHR,WTI,STNG,ARRY,SWIR,TH,RVNC,HLIT,PAYO,CPRX,RXDX,PBF,DCPH,STEM,XMTR,NTNX,
PT PORTFOLIO UPDATE
LONG FOCUSLIST 📈
SHORT FOCUSLIST 📉🆕
(PLEASE READ CAREFULLY 👇)
In recent years, I have always been a LONG focused swing trader. In 2021 & 2022, I developed the skill to short the market indices (QQQ/IWM/SPY) with 3x short ETF instruments like SQQQ/TZA/SPXS, etc. This has worked really great for me this year as this is the main reason why I’m up almost 30% YTD.
Now that I added this string to my bow and developed my edge in it, I feel that the next step for me to potentially increase my return during a correction & bear market is to short individual stocks.
As a contrarian indicator, that probably means that we’ll bottom very soon, and you could then all thank me 🤣 But if the FED really continue to tighten for many more months like they’re doing right now, we might see more downside to this bear market that I want to profit more aggressively.
I’ve studied short trading for many months and found that my setup playbook and my chart reading apply really well to short setups as well, there will be nothing new in terms of swing trading… wedge breakout, wedge breakout retest, playing the retest of broken support area/levels, etc. You’ll recognize my setups.
That being said, I will test this new trading incrementally and I’ll start with very tiny positions, around 2.5 to max 5% of my capital, and only take 2 positions maximum. I want to get the feel of the short side, build my confidence and forward-test my playbook in this type of trading.
This section might not be perfect at the start, it will evolve as my skills improve, but I offer you the opportunity to join & follow my journey in discovering the dark side.
DVAX 10.41, LULU 279.1, PRVA 33.2, SWAV 245.03
DVAX
After a 40% decline, we consolidated in a pretty tight area below the 50dma. I like how we built these lower highs in the last week and that Friday we rejected the recent base area. We also sitting right at the UTL.
Entry: recent swing low pivot @ 10.41$
LULU
LULU almost lost 50% from the highs and formed a big rally contained by the UTL that we just broke below. Recently, we cracked below the 50dma, retested, and got rejected by it before forming a lower high right at the 21dma last week. I would use the recent swing low for an entry.
Entry: recent swing low pivot @ 279.10$
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.
Entry: recent swing low pivot @ 33.20$
SWAV
A name that I considered a potential TML and acted super strong in the past weeks despite the general market weakness, just cracked last Friday IMO. We had a clear base area and we respected it fairly well, with a reclaim mid-Sept, before breaking down again and retesting that area from the downside last week. We finally got rejected at the reclaim attempt & 21dma. Friday also broke below our recent wedge UTL.
Entry: recent swing low pivot @ 245.03$
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.
Want to know how to execute these setups & trade side by side with me?
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We are now over 150 traders in the DISCORD channel, for:
Getting my own trades & market commentary live
Education & mentoring
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Macro Economy, Crypto & more!
Staying on the right side of the market with a risk management approach first.
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. :)
Thank you for the add of SHORT setups! This might be relevant after some time. It's also pretty brave and honest from yourself to try it, take the risk and advance some specific setups "publicly". Let's go with the PT's team. And as a great music band said, "there is no darkside of the moon really, matter of fact it's all dark" :)
Hey Alex, I have appreciated your educational articles. How about a primer on how you have used inverse ETF's this year?
Cheers,
John