Alex's daily Market update & Focuslist - 01/16
Major indices are digesting near their highs, while breadth is still contracting under the hood.
Good evening!
The market is still trying to digest the year-end rally, with breadth deteriorating today with a 5th down day in a row and now getting ST oversold.
Major indices (NQ/ES) are trading tight below their 52w high and within striking distance of ATH levels. IWM/RTY (small-caps) are breaking their structure to the downside, reinforcing the breadth deterioration observation.
With the ST oversold condition and seeing how leading stocks like NVDA, AMD, CRWD, etc, and the overall semiconductor & leading sectors are acting, we could see a technical & local bounce very soon. From there, we’ll have to see how breadth is expended, as the long-term breadth is still pretty extended.
I continue to let my portfolio positions and leading sectors/stocks dictate my decisions. If the selling accelerates, I’ll be looking to go on the defensive, but that’s not the feedback I get right now.
Price action first.
Alex ✌️
Tonight’s daily report content
PrimeTrading Market Model #PTMM + Takeaways
General Market Analysis: NASDAQ - S&P 500 - RUSSEL 2K - OTHERS, including my daily levels & my bullish and bearish scenarios
Market Internals
Sectors & Themes Analysis
Daily Focuslist including setups, alert levels & explanation (long & short)
Leaders list + Scans (technicals, fundamentals & potential TMLs)
My Portfolio Update
Economic Calendar
PrimeTrading Market Model #PTMM + Takeaways
PTMM is on a RED market signal (🟥)
Key Takeaways:
It was a good selling day, with GDB at -442.
Daily momentum increased again today.
With a 0.17 daily_ratio, it brings the 5&10-day ratio in the oversold area and potential ST buying opportunity.
MT_momo flipped <1 and no more extended.
Once again, 5&10-day ratio is oversold after 5 straight selling day in a row, don't be too bearish here, the market could put a ST bounce anytime from here, IMO.
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GENERAL MARKET ANALYSIS
S&P500 (ES_F)
The market is still trying to digest the year-end rally. We saw a powerful bounce off the base level & 10wma last week, which is very constructive. However, we also see breadth contracting and fewer stocks participating in that rally.
If we follow through on last week's bounce and break to new highs this week, we’ll want to see breadth expanding and catching up.
Daily, we still have our two very key pivots to work with:
4830$ for a new high and continuation of the uptrend
4767$ breakdown for a rollover and potential 2nd leg down of that pullback.
These two levels will be my barometer for the ST direction of the market.
NASDAQ (NQ_F)
NQ started the day strong but got rejected at the 17045$ pivot. We saw some selling pressure as we retested the UTL structure and the 8dma, but it held well, and we closed the day strong in the upper range.
We remain in that 16753 & 17073$ range, but today was another higher low and close strong. If we can break above 17073$, we could see a market push and breadth expansion if the rest of the market follows.
It's hard to be bearish with that daily/weekly NQ chart.
RUSSELL 2K (RTY_F)
Small-caps broke their recent consolidation structure to the downside. Despite NQ/ES, this structure break shows the breadth deterioration and is undoubtedly a sign of caution as we’re still waiting for ST direction confirmation.
Market Internals
Market Breadth & Extension (Stocks > 5, 20,50 & 200dma - short to long term view)
ST breadth is still contracting, and we are digesting the year-end strong rally. Mid & LT, we are still very elevated and extended.
Classic week open spike. We stayed below the 14.49$ and still in that last week’s range.
There are no red flags yet, but it is to be monitored.
MOVE (Merrill Lynch Option Volatility Estimate - Bond market volatility)
Downtrend.
10Y Bond Yields (daily)
US dollar index (DXY)
Kma’s reclaim as we popped out of the recent wedge today.
Still below all kma’s - no red flag.
BTC/USD (Bitcoin)
Trying to stabilize around the 21dma & UTL structure after last week’s failed b/o.
SECTORS & THEMES ANALYSIS
Large/Mega-cap held the market today
Semis 🔥
Telecomm
Software
Shipping
10 leading themes charts (w/ pivots):
1 Uranium URA
ST Extended
2 Software IGV
Digesting recent move
3 Semiconductors SMH
Handle breakout today and trying to make a continuation breakout here. Clear leader today.
4 Cancer CNCR
5 Cybersecurity CIBR
Holding recent swingH pivot today. Digesting the recent rally.
6 Cloud Computing SKYY
8dma retest and normal reaction off the recentH level retest. We are seeing healthy digesting and pullback action before attempting a new high. I like the look of that sector.
7 Internet PNQI
Same type of action than SKYY here.
8 Homebuilders XHB
Still building constructively here at the 21dma.
9 Artificial Intelligence & Technology AIQ
21dma pullback after last week’s push, normal action.
10 Biotech XBI
21dma pullback, will it hold?
Sectors & Themes ideas (weekly):
From the weekly charts, we might see a big week for Tech. Cyber, Software, Cloud, Semis, Internet, and potential continuation in Uranium, Gaming/Sports & insurance.
CNCR/Biotech seems tired & extended.
That's the charts we want to see with key & strong 10wma bounce in tech last week.
FOCUSLIST
DEI daily/W/65m - DOUGLAS EMMETT, INC. - Alert: 14.45, SL: 14.04
Still building that 21dma pullback as we're trading tight below the DTL while making higher lows.
MLTX daily/W/65m - MOONLAKE IMMUNOTHERAPEUTICS - Alert: 59.45, SL: 54.67
Setup still valid with a 59.45 pivot.
INSM daily/W/65m - INSMED INCORPORATED - Alert: 28.77, SL: 27.89
Building a BORL setup just above the base level and around the 21dma, with a higher low today.
BLDR daily/W/65m - BUILDERS FIRSTSOURCE, INC. - Alert: 168.04, SL: 163.37
I love this setup a lot. Building tight handle on the right side and just below 52w high level after the recent 21dma pullback. We are getting really tight with today's potential higher low as well. Volume anemic on this entire base building while this leading sector digested the recent uptrend.
FSLY daily/W/65m - FASTLY, INC. - Alert: 17.81, SL: 17.11
It is still building constructively near the bottom of the base and around the 21 & 50dma. We are getting very tight after last Monday's pop from the base-level retest. That's a name that can go fast from that kind of low spot.
SCANS
21dma pullback scan
INSM PCVX RNG BBWI CCL JWN WAL BXP CUK ACAD NTRA IMVT SLG ITCI
50dma pullback scan
CUK DKNG
Pullback-tight scan
AXSM XRX CCL JWN MAC WAL XENE BXP CUK ACAD NCLH NTRA SLG
Continuation breakout scan
None
Bigger the base, higher in space scan
OLLI MDB FSLY
PORTFOLIO UPDATE
Stopped on PDD runner
New position in STNE & CLVT for -0.57% NUR.
Tried CHGG but got stopped
Positive on new exposure (+0.06%ec), but PF felt some pressure.
Overall, PF is still holding and I don't see any red flag yet in any of my current positions. SMCI could be tomorrow if we can't get supported above the 21dma, but we'll see there.
Once again, 5&10-day ratio is oversold after 5 straight selling day in a row, that's why I am looking to open up exposure like I did in the first week of January. Trying to play the technical bounce in STILL a confirmed uptrend.
INTRADAY/CLOSED TRADES:
Important economic news/events (weekly)
REFERENCES
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