Alex's daily Market update & Focuslist - 02/07
Reversal attempt #1
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Alex ✌️🙏
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Price Action Analysis:
ES_F action was pretty quiet this morning as we started with a 4109$ level retest and then waited for Jerome Powell's interview. I was not expecting such a reaction to this interview, as we had a 1.7% upswing, followed by a 1.85% downswing, then another 2.20% upswing...all within the afternoon. That was crazy action.
We finally closed above the 4137$ level and the channel DTL I was looking closely at. We are still inside that significant resistance area and below 4180$, but what we saw today is positive to confirm that possible continuation. We need to see if we can breakout from that base area and follow through tomorrow.
On the upside,
The 4180$ and 4212$ levels are significant potential resistance levels.
On the downside,
The 4137$ level is now potential support. If we break below that level, I think this reversal will be in danger of failing.
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 (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)
Alex’s TAKEAWAYS
Today, we confirmed that the current uptrend is VERY strong, and the recent pullback was indeed healthy.
We will want to see a follow-through action or a new higher high above last Thursday’s high pivot to really confirm the continuation higher.
That said, finding support that quickly at the 10dma is quite impressive for an already extended market. We are clearly in a power trend, and we must play this market until we get a clear signal that the trend is turning.
The trend is still UP and STRONG!
Some observations:
NQ_F is back 10% above the 50dma.
VIX 21dma rejection and closed below the critical 18.67/19.54$ base area & DTL. This is a very positive action and indicates that the market might begin to trend better.
DXY 50dma & 103.58$ level rejection.
Credit Spreads with an LT wedge UTL short BORS.
Strong action in the leading names, especially in semiconductors.
McClellan's summation index (MT_SIGNAL) just turned back positive.
Major indices still are at important resistance areas. Despite the strong reversal today, we want to see a HH & follow-through action.
Stocks above 20 + 50dma are still pretty elevated.
A strong reversal in the sectors I was watching closely today. XBI, SMH, IGV & XLE
Overall, increasing numbers of interesting setups and retest of key areas in strong names
The intermediate term is bright, and I think this rally might be the start of something more, but the market will not move in a straight line. This could also be another technical rally in this bear market, and we don’t know…so it’s very important to bend with the trend and follow price action.
Market health & Trend indicators:
LT_SIGNAL: uptrend (black) + ABOVE 50dma = INTERMEDIATE-TERM UPTREND (🟩)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = SHORT-TERM UPTREND (🟩)
Tomorrow's economic news/events:
GAME PLAN:
Today, I’ve lost some exposure due to the early afternoon reversal. I thought the market rejected these major resistance areas with a failed reversal attempt. I was able to rebuild some before EOD, but it was too late.
If we follow through tomorrow, I’ll try 1-2 full positions and see how much cushion by EOD I can keep according to my progressive exposure limits.
EXPOSURE MODEL:
PRIME_LIST (potential TMLs)
AEHR ALGM FOUR ELF LSCC BAND
AEHR: 10dma support today and tried to breakout into a new ATH. The base still looks very healthy, and we’re building higher lows at the 10dma. Tomorrow we might breakout here.
BAND: Another inside day and 10dma support today. I added to my position on the 26.74$ base level reclaim today. This is building nicely with a second rejection from the base level and an outside day.
FOUR: Working great so far, with a breakout of yesterday’s inside day on the upside. We closed just below the 67.62$ pivot that I will use to add the last portion of my current trade.
LSCC: Solid bounce at the 10dma and channel breakout today. Just too bad ER are so close to initiate a position.
ALGM: new ATH… It just doesn’t want to cool down.
ELF: breakout to a new high. I will wait for at least a BO10PB setup.
FOCUSLIST (LONG)
FOUR 67.62, YPF 11.75, XBI 90.78, LRCX 536.58, PATH 17.15, MELI 1188, CSIQ 40.8,
FOUR - Alert: 67.62, SL: 62.74
See PRIME_LIST.
YPF - Alert: 11.75, SL: 10.99
The best-looking Energy setup tonight. A PERFECT BO21PB setup. Clear VCP characteristic with the contraction both in price & volume. Three higher lows at the 21dma, and tomorrow if we breakout of the DTL, this one could move fast.
UPDATE: It tried to breakout today but closed back below the entry pivot. Be aware that tomorrow at 10:30 is the Crude Oil inventories report, which will certainly move the sector and this stock.
XBI - Alert: 90.78, SL: 89.03
The biotech sector pullback is looking very healthy, and I like that 89.63$ base level retest which could create my BORS setup. With SMH, this is probably the best looking & healthier pullback right now. A breakout of the DTL and 90.78$ pivot reclaim would confirm the setup. You can also play this trade with LABU for 3x leverage over XBI.
UPDATE: deep 21dma retest and reclaim of the 89.63$ level and almost channel breakout.
LRCX - Alert: 536.58, SL: 516.84
A strong semiconductor name broke the base level last week on high momentum. This is the first pullback we have had since then. I like the channel DTL breakout near the 10dma today, and I would play today’s high pivot for an entry and confirm the continuation.
PATH - Alert: 17.15, SL: 16.03
Software names are curling up from stage 1 base breakout, and PATH is one of the strongest that interests me. We broke out of stage 1 last week, then retested the 10dma today as the first stage 2 consolidation. We broke the DTL EOD, and I will look at yesterday’s high pivot for an entry.
MELI - Alert: 1188, SL: 1129
A Strong name in the last month that finally started a consolidation in the last week or so. We broke below the current consolidation base area today, filled the Jan. 26 gap, then reclaimed the base area. This also created a shakeout that could fuel a move up tomorrow.
CSIQ - Alert: 40.8, SL: 39.04
With ENPH reporting at the close today, the reaction seems to be good after-hours, and it will certainly spill into the other solar stocks tomorrow. The only one of interest and has a relatively tight chart, and volume is CSIQ. We even made a shakeout today below the 21dma and recent consolidation base area.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES (Included in Discord membership):
SECTORS PERFORMANCE
Leading sectors:
(SMH) Semiconductors - Channel breakout and 246.76$ base level reclaim. Can we follow through and reclaim the 257.20$ level as well? We are still in resistance area, but we are seeing very constructive action.
(TAN) Solar - We held the 50dma, and ENPH reported good earnings as per the reaction so we might gap up above the kma’s tomorrow. We're still in consolidation as long as we’re below the 83.10$ base area.
(XBI) Biotech - See FOCUSLIST
(XLE) Energy - Powerful bounce out of the channel after an 85$ base retest as expected. We are now back above the kma’s, and tomorrow's Crude Oil Inventory report should impact this sector.
(XME) Metals & Mining - 21dma bounce today.
(XRT) Retail - 10dma bounce, but still inside the mini-channel.
(IGV) Software - Strong mini-channel breakout after a 10dma retest. We are approaching a possible 293/301$ base area retest.
MARKET BREADTH & INTERNALS
$NYHL (Cumulative new 52W Highs/Lows & 50dma)
LT_SIGNAL: uptrend (black) + ABOVE 50dma = INTERMEDIATE-TERM UPTREND (🟩)
!MCSUMNYA (McClellan summation index & 10dma)
We turned back positive today.
MT_SIGNAL: uptrend (black) + ABOVE 10dma = SHORT-TERM UPTREND (🟩)
$NYMOT (McClellan Oscillator - Breadth extensions)
Very small bounce.
NYHL (New 52W Highs/Lows) - small bounce
NYAD (Net Adv/Decl) - Positive thrust. Still below 1000. I want to see +1000 tomorrow on a possible follow through.
$NYA200R (Stocks > 200dma - LT breadth) - slight bounce.
$NYA50R (Stocks > 50dma - MT breadth) - slight bounce.
$NYA20R (Stocks > 20dma - ST breadth) - slight bounce.
VIX (Volatility S&P 500) - We got rejected at the 21dma and closed below the critical 18.67/19.54$ base area & DTL. This is a very positive action and indicates that the market might begin to trend better.
DXY/TNX (US$) - 50dma & 103.58$ level rejection.
Credit Spreads (IEI/HYG) - short BORS setup at the UTL. Risk is NOT priced in and quite the contrary after today’s confirmation. We’re going in a sustain risk-on-market IMO.
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
AEHR,ALGM,JXN,FOUR,TGTX,ELF,LSCC,RPD,BAND,MNDY,OII,RCL,FLYW,NINE,CENX,HCP,PATH,GTLB,TOL,ATI,
Fundamental leaders (FA Score)
EURN,ENPH,FRO,ALB,NOG,CALM,ELF,TRIP,LTHM,ESTE,GFS,RUN,PR,JXN,CPRX,SPLK,LNTH,ALGM,AEHR,CPE,
Technical leaders (TA Score)
TGTX,AEHR,ALGM,RPD,JXN,FOUR,MNDY,BAND,LSCC,OII,RCL,ELF,FLYW,CENX,PATH,DOCS,HCP,GTLB,TOL,ATI,
Relative Strength 1 Month (1M-RS)
LCID,TGTX,RPD,DKNG,CNK,PATH,ALGM,AEHR,MNDY,APP,GTLB,ABNB,MELI,CHPT,TOST,ON,BTTR,CAR,RCL,FRO,
Relative Strength 3 Month (3M-RS)
TGTX,RPD,MNDY,AEHR,FOUR,ALGM,DOCS,FLYW,BAND,LSCC,PATH,APPS,JXN,NINE,HCP,CENX,OII,GTLB,EVH,ELF,
Relative Strength 6 Month (6M-RS)
NINE,TGTX,AEHR,OII,ELF,RCL,ALGM,JXN,BAND,FOUR,PARR,WNC,INSW,VAL,PRTA,CENX,GPS,ATI,PR,LSCC,
REFERENCES
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