Good evening folks,
Hope you were safe on this pretty nasty selloff today. Let’s see if we can see clues of a potential reversal soon.
✌️🛡️
MARKET REVIEW
Selling pressure continued today with a 2.70% drop in $NQ.
We lost the 21dma and also the channel DTL, which can indicate either a selling climax or an acceleration in the downtrend. Also important to note the close below 12963$, the most recent low structure in the rally. We are now seeing a LOWER LOW with today’s close. We could see a shakeout of that pivot if we reclaim it quickly tomorrow and push higher with conviction.
We are now approaching pretty important levels as we are less than 1% away from the 50dma and also the 12801$ important potential support. I will begin to search for a bottom at these levels as this is a confluence of pretty big potential support areas.
That being said, I still think we are living through a normal pullback to remove the excess by looking at the market leaders that still buck the trend and build their bases very constructively. With some names like CELH 0.00%↑ & AEHR 0.00%↑ being close to breakout.
What are the levels I’m watching on NASDAQ tomorrow?
On the upside, we want to see a reclaim of the 12963$ level at least and ideally of the 13108$ level as well. and also a close above the 5/10dma would be really ideal.
On the downside, the next potential supports are the 50dma & the 12801$ support top area level.
MARKET BREADTH
MMFI (Stocks > 50dma) - Gap down and 10% move down just below the 21dma. We are now retesting the prior March rally high, which is a potential good support area to watch tomorrow.
MMTW (Stocks > 20dma) - Big 30% drop on the more short term breadth indicator. We are now in a zone that tends to act as resistance, so we’ll have to see if we can consolidate here a bit tomorrow.
VIX - BIG spike in VIX today as we were up more than 20% intraday. We rejected the last month’s UTL, the 50dma, and the recent 24.33$ resistance level as well. If we are approaching a bottom on this pullback, this would be a logical place for the VIX to top. If we continue higher, we could really be in trouble IMO.
DXY (US $) - US$ continued to spike with another important move. We are now in potential resistance from the last run up top. If we have to reverse, it would be here.
US10Y (US 10Y bond yield) - 10Y tested back the 5dma at the open and reclaim the resistance area to close above it. Likely more upside.
US2Y (US 2Y bond yield) - 2Y was yet not able to breakout of that 3.33% level. We are at a pivotal point tomorrow on this one.
IEI/HYG (Credit Spread) - Credit spread continues to spike and is now above all kma’s and within the resistance area. 2 big days on volume. If we reclaim that area, this could mean more trouble for the market.
BTC/USD (Bitcoin) - Did not follow the market down today, this is decoupling action on the crypto & risk asset IMO. We retested the lows this morning but almost close unchanged.
NG_F (Natural Gas) - big breakout for Nat Gas. Let’s see if we follow through or not tomorrow.
CL_F (Crude Oil) - Crude Oil is about to breakout from that last month’s channel with the DTL breakout on the futures. Likely more pressure ahead for Oil, which is not good for the equities market and especially inflation.
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
(SMH) Semis - Biggest loser of the day with an open and close below the 50dma & 232$ support. (what support 😂) We are now back to the stage 1 base support area. We really have to hold this area, otherwise, we are looking at a rollover and 3rd leg down IMO.
(TAN) Solar - Was not able to hold the 21dma and the 83.30$ support level. Still holding above gap up.
(XBI) Biotech - Tried to reclaim the 21dma but got rejected and close just above the next potential support, 84.63$. There will be a confluence with this level and the 50dma, so tomorrow should be important here.
Let’s look at our 6 other sectors that just broke out of stage 1 bases
(CIBR) Cybersecurity - Back to stage 1 base support area & 50dma. It’s a MAKE OR BREAK here.
(FDN) Internet - Back to stage 1 base support area & 50dma. It’s a MAKE OR BREAK here.
(IGV) Software - Back to stage 1 base support area & 50dma. It’s a MAKE OR BREAK here.
(XME) Metals & Mining - Back to stage 1 base support area & 50dma. It’s a MAKE OR BREAK here.
(XRT) Retail - Back to stage 1 base support area & 50dma. It’s a MAKE OR BREAK here.
(XLF) Financial - Not able to find support at the 21dma. Back to recent consolidation area level.
Alex’s TAKEAWAYS:
The indices are selling off and breadth is dropping fast as well. We are approaching levels that we really have to hold on $NQ, but also on all the recent strong groups that broke out of stage 1 bases. If we can’t hold these breakouts on all those groups, the market can really go way lower going forward IMO.
That being said, we are still seeing very nice setups, and leading names are holding and building bases in a very constructive manner. It’s now a question to know if the market weakness will eventually drag them down with the rest, or will they breakout before everyone as the market will find a bottom. At this point, I am following the leading names until they show red flags as well.
LEADERS LIST
Overall leaders (PRIME Score)
SIGA,SWAV,STEM,AEHR,CEIX,NFE,ENPH,CPRX,STKL,TH,MRSN,AIV,SPWR,HRB,NOVA,LNTH,SMCI,INSW,RUN,BFLY,
Fundamental leaders (FA Score)
RES,AMR,HCC,DK,MRO,ERF,DVAX,MGM,DRH,TELL,LBRT,BHF,ENLC,SWAV,LC,TRGP,SLDP,WTI,MPC,FANG,
Technical leaders (TA Score)
MRSN,SIGA,CPRX,SWAV,AEHR,STEM,STKL,ENPH,CEIX,SPWR,NFE,PLUG,HRB,BFLY,SMCI,AIV,NOVA,CSIQ,RUN,CHS,
Relative Strength 1 Month (1M-RS)
MRSN,SIGA,CPRX,LAZR,CLAR,SWAV,BFLY,STEM,WTI,AZUL,AEHR,PLUG,RKLB,OSCR,CRK,PBF,INSW,FUBO,SPWR,JXN,
Relative Strength 3 Month (3M-RS)
TH,AEHR,MRSN,CPRX,STEM,SWAV,SIGA,BFLY,ELF,AGEN,HIMS,ENPH,CELH,PLUG,GTLB,BKSY,CHS,AIV,PLAB,PRVA,
Relative Strength 6 Month (6M-RS)
TH,SIGA,LNTH,NFE,CEIX,STNG,CRK,MRSN,STKL,ENPH,CPRX,SWIR,SWAV,EQT,HRB,AR,ARLP,CELH,PBF,PRCT,
PT PORTFOLIO UPDATE
Tomorrow’s game plan:
I will continue to focus on the leading names tomorrow. If CELH & AEHR can’t hold today’s gain and the market is selling off again, I will probably cut back a lot of exposure. But if these names are following through on today’s strength and market is trying to find a bottom, I will continue increasing exposure in leading names.
Alex’s FOCUSLIST
CELH 🎖️
No presentation needed ;) CELH is shaping up with a perfect BO21PB setup which also creates the handle of the larger multi months C&H pattern. I already have a pretty big position in this name, but looking to add even more on that DTL breakout.
UPDATE: A very strong day decoupling from the indices and approaching the DTL entry level.
Alert - DTL + 105.52$
RES
Oil name setting up for a handle breakout at the 50dma after a bigger wedge breakout. This is the #1 fundamental score of my entire UniverseList.
UPDATE: gap down but got supported by both the 21 & 50dma.
Alert - 7.82$
AEHR 🎖️
Very powerful name that just made a 60% run in less than a month. I am looking at a potential HTF at the 10dma (BO10PB setup). We are building tight action above the 10dma with higher lows within this consolidation.
UPDATE: Gapped down below the UTL from consolidation lows only to come right back up on volume. We finally closed above all kma’s on a nice shakeout.
Alert - DTL + 18.29$
TELL
A name that was in the FocusList last week and that I still have a position. We are now seeing a BORS setup as we retested the base 1 support area today. We are building a consolidation in the last 2 days and if we reclaim the 4.72$ level we would confirm continuation higher.
Alert - 4.72$
SIGA
One of the top recent performers of the recent months setting up for a potential BORS setup on the restest of that first swing high end of July. This resistance flipped to support and I’m now looking at a reclaim of 24.40$ pivot for an entry.
UPDATE: down day, but on very light volume and still within that support area and above the 21dma. I like how this is developing.
Alert - 24.14$
CSIQ 🎖️
A potential very strong solar name as we just had a nice PEG with the highest volume of the last year. We pulled back to retest the recent structure high and found good support today on the reclaim. This is a classic BORS setup following ER, which I love to see.
See here for a comparison of CSIQ vs ENPH
Alert - 44.67$ + 47.69$
EVH 🎖️
A health care name (recent leading sector) which was in the process of pulling back following its earnings 2 weeks ago. We bounced from the 50dma in the last 4 days and just reclaim the recent resistance area and all kma’s. I would use 36.65$ recent swing high as a potential setup confirmation.
Alert - 36.65$
STNG
A shipping name showing constructive action above the recent base area. We just broke from the most recent channel back to the support area and the 21dma. I would use the recent swing high 41.21$ for the setup confirmation.
Alert - 41.21$
GFF
Recent leading name that got alerted in PT on the BORS setup in early august. Now setting up for its first BO10PB setup after that run. A break of 33.60$ would confirm the continuation
UPDATE: tried to breakout today, but closed below our entry pivot. I will keep this one on my radar tomorrow for a 2nd attempt.
Alert - 33.60$
🎖️ = Alex’s highest conviction setups
REFERENCES
Articles on my system:
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