Good evening folks, here’s another daily Market Update & Focuslist!
General market Review that includes my Bullish & Bearish scenarios
Market Breadth & Internals
Economic Calendar
Sectors Review
Leaders list
My own Portfolio update
My own daily Focuslist including setups, alert levels & explanation
✌️
MARKET REVIEW
Russel 2K (RTY) Daily:
The market opened the week with a gap up and another attempt to breakout from the 5dma, only to get slammed down at the open once again. Very similar trap action we saw last Friday.
We then closed right in that 1800$ level support area and now broke below it on the futures market. If we follow through on this selling tomorrow, the next potential area of support could be around 1755$.
We are still in quite an oversold condition right now, but the market is proving to us that the downtrend is very strong so far and every bounce attempt is being hit with large selling. We also see an acceleration of the volume in the last few days and also a very consent high volume since Jackson Hole. That’s not your aunt Tilly selling her 401k, that’s big institutions action we see here.
Still, a wait & see and RISK-OFF market for me here as we’re still below all kma’s.
What are the levels I’m watching on RUSSEL tomorrow?
On the upside (bullish scenario)
IF - We get a reclaim of the 1800$ pivot and a close above the 5dma.
THEN - Increase long exposure by respecting our progressive exposure rules and using entry pivot from the FL. Also, get engaged with some general market exposure (TNA)
On the downside (bearish scenario)
IF - Already in the bearish scenario
THEN - Already in the bearish scenario
MARKET BREADTH & INTERNALS
NYHL (New 52W Highs - Lows) - NNH accelerated again with a close @ -205.
NYAD (Net Adv/Decl) - Net Declines accelerated from Friday’s print, but decelerated the overall downtrend with a -1164 read.
MMFI (Stocks > 50dma) - powerful downtrend continue here with another big move down and below all kma’s.
MMTW (Stocks > 20dma) - On the shorter-term breadth indicator we are right at the oversold 15% area I talked about for a few days now. This is where reversal/bounce happens. Keep in mind again that we could stay oversold for a few days, but at some point, we’ll see some upside. (sustained or not, idk yet…)
MCOSINYA (McClellan Oscillator) - McClellan is back to historical oversold conditions @ -322.
VIX - VIX continued Friday’s reversal and made a pretty big move today. Stil in that consolidation box that I’m monitoring closely. If we break that box higher, I think we really might run hard in the 30s or more in a capitulation-type move.
CPCE (PUT/CALL EQUITY RATIO) -
DXY (US $) - US$ reclaimed the recent swing high of the base breakout and closed up 0.6% and continues here on the futures. This action is a base breakout confirmation for me.
US10Y (US 10Y bond yield) - Big move on the 10Y today… Bouncing at the 5dma and now sitting at the top UTL again. We approach the very important 3.44% from the last June top.
IEI/HYG (Credit Spread) - Credit Spread not going anywhere today with an inside day.
BTC/USD (Bitcoin) - Bitcoin losing the UTL and breaking lower and now approaching the new low territory. Not a good look for Crypto…
CL_F (Crude Oil) - Rejected at the 10/21dma again and now at a new low on the futures. Likely more down prices ahead.
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Leading sectors:
(TAN) Solar - Nice bounced from the 50dma and bottom DTL today as the market was selling off. We saw also very positive action in a leading name like ENPH.
(XBI) Biotech - Biotech with a new recent low and getting back in that stage 1 base support area. Not looking too good.
(XLE) Energy - Not able to follow through and got rejected at the 10dma after a ST bounce from the 50dma. Still above the support area and on low volume, so nothing to worry about yet.
(PBW) Clean Energy - Pretty much unchanged, still below the 50dma. Some relative strength on names like CHPT, NOVA, etc today in this sector.
On watch sectors:
(SMH) Semis - Tested back the recent low and closed above both that level and the recent support area as well. Still holding.
(IGV) Software - Still holding the UTL, but below all kma’s.
(XLF) Financial - Still holding the stage 1 base area.
(FDN) Internet - New low
(XME) Metals & Mining - Holding the stage 1 base area. Still below the 50dma.
(XRT) Retail - New low
Alex’s TAKEAWAYS:
As we continue to see oversold conditions for the last few days, the price action on the indices still showing very strong downtrend action. We have to respect the current market and trend and keep ourselves out of a very choppy and high failure rate type of trading environment.
We were not able to hold yet another important potential support area today (1800$), reinforcing the strength of this current selling action on high volume.
We’ll need more confirmation of a trend change before getting really engaged in this market. Now is not the time, but let’s stay engaged and ready to pull the trigger when our BULLISH scenario materialize.
DEFENSE, BUT STAY POSITIVE & OPEN🛡️
LEADERS LIST
Overall leaders (PRIME Score)
CEIX,INSW,CPRX,MRSN,RXRX,XMTR,EURN,ARLP,YPF,DHT,PDD,NAT,CCRN,DCPH,FRO,PRVA,AIV,CSIQ,ENPH,PRTY,
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,CPRX,RXRX,CEIX,INSW,EURN,YPF,XMTR,ARLP,PDD,DHT,NAT,FRO,ARRY,DCPH,PRTY,ZLAB,CSIQ,ENPH,NLSN,
Relative Strength 1 Month (1M-RS)
AVYA,PRTY,YPF,MRSN,TELL,XMTR,PDD,INSW,FRO,LTHM,RXRX,EURN,WFRD,FTCH,FUBO,LAZR,ARRY,BTU,ULTA,DHT,
Relative Strength 3 Month (3M-RS)
APDN,MRSN,CPRX,ZLAB,TH,BFLY,PRTY,XMTR,AGEN,PRVA,ARRY,STEM,RXRX,SWAV,BEAM,TGTX,AIV,WOLF,ELF,HIMS,
Relative Strength 6 Month (6M-RS)
TH,DCPH,ARRY,SIGA,STNG,CEIX,CVI,STKL,MRSN,CPRX,ENPH,CRK,HDSN,ARLP,STEM,HRB,INSW,DINO,CELH,SWIR,
PT PORTFOLIO UPDATE
Recent operations:
No trade today
Position management GAMEPLAN:
Maximum new exposure: 0% - RISK OFF (except if bullish scenario triggers - then max exposure @ 20% total)
Position size: 1/2 positions max (10% of equity)
Position management
First trim: sell 50% initial position
Trim @ first day EOD
SL moved @ breakeven
2nd trim: sell 25% initial position - 10dma EOD break
3rd trim: sell 25% initial position - 21dma EOD break
Scale-out approach
Alex’s FOCUSLIST
INDI 0.00%↑ 🎖️
A semi-name with a stage 1 base breakout following earnings. Considering the sector weakness it’s a clear RS sign IMO. There is also a big accumulation that took place in that base recently. (high buying volume) I would play today’s high pivot as an entry to play the breakout itself.
UPDATE: One of the strongest names on my FL today again as we stayed above the stage 1 base breakout area and even above the 5dma.
Alert - 8.53$
Biotech name that is set up for a continuation base breakout after an initial 50% push in 2 days following the last ER. Never really got below the 10dma
UPDATE: Came back a bit today, but as we’re now sitting at the UTL & 10dma, we MIGHT see a bounce here. Would make a good anticipation play to enter before the 8.02$ pivot.
Alert - 8.02$
CPRX 0.00%↑ 🎖️
Just found good support at the 21dma and most recent swing low as well. I like how that pullback was very tight in price and also the volume declined all the way. Might need a couple more days to consolidate below the pivot, but could also rip straight higher as this has been a recent leading name.
UPDATE: Pretty much unchanged today, but retested the DTL and stayed above the 21dma and UTL. Overall pretty solid action on this name and looking good for tomorrow.
Alert - 14.24$
Large consolidation following that base breakout. We just broke the DTL after a bounce from the 50dma on Friday. I would use the recent swing high pivot for an entry.
Alert - 26.09$
ENPH 0.00%↑ 🎖️🎖️
This will be my focus for tomorrow, I want to see this name hold. That’s one of the leading solar names IMO. It held really well on this entire market selloff and we just showed a lot of strength today from that 21dma bounce on 120% volume today. Recent swing high and DTL for an entry.
Alert - DTL + 296.82$
LTHM 0.00%↑ 🎖️
After a 70% run from the lows, we are consolidating on low volume and in tight action in the last week or so. We held the 21dma and even made a retest and a higher low on it today. There are buyers there… I would use the DTL or 31.53$ level for an entry.
Alert - DTL + 31.53$
80% prior leg up. Recent consolidation is a little lower at the 50dma, but I really like the volume profile in it with reversal on big volume compared to down days. I would use today’s high for an entry as this is a reclaim support level day. If we breakout higher, we confirm the follow-through higher IMO.
Alert - DTL + 59.98$
Multi-month base breakout on the last ER, and we just made a nice BORS setup on that breakout area retest. Recent swing high pivot for an entry.
Alert - 433.88$
🎖️ = Alex’s highest conviction setups
NOTE: I have the discipline to build a detailed FocusList each night, but I want to emphasize that 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.
REFERENCES
Articles on the system:
I really hope that you enjoyed it. If you did, please share it so that more folks can be reached and this Newsletter can grow. :)
Subscribed
Thanks Alex. Regarding the VIX tracking, are you looking for stabilization and therefore lower VIX or something that shows less range with tighter H/L?