Alex's daily Market update & Focuslist - 02/06
Pullback day #2
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Alex ✌️🙏
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Price Action Analysis:
ES_F pullback continues as we retested the 4109$ pivot overnight and this morning before closing in the upper range of the day, just below the 4137$ level. Volume was also below average, which is a good sign.
Tomorrow we’ll have to observe a couple of scenarios from either side, but one thing is sure, we want to see the volume remains low if we continue lower.
We have our DTL to watch for a potential pullback mini-channel in progress.
We are in a very strong uptrend, above all kma’s, yet we are pretty extended (indices/stocks/breadth) and are at a key resistance area. So yes, I expect a pullback, like I said last week, but the big question is whether this pullback is healthy.
On the upside,
I’ll watch for a retest of the 4137$ very closely. If we try to reclaim that level, will we reject it to create a short BORS setup (downside retest & rejection lower), or do we reclaim and close above it?
If we do reclaim 4137$, then 4180$ and 4212$ levels are significant potential resistance levels. We also have our potential mini-channel developing, so I’ll also watch for that DTL on the upside.
On the downside,
I’ll also want to see the 4109$ level & 10dma show support tomorrow. It would be the perfect scenario for a small & healthy pullback. Below that, it could indicate a deeper move in the books.
If we push below, 4082/4056$ area and the 21dma would be the next target.
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
I can see some positive signs in that current pullback, but some mixed too. Let’s look into that:
NQ_F 7.9% above the 50dma. We cooled off again today and now approaching more reasonable levels. ES_F at 3.8% only.
I like the leading names action, building inside days, or tight days at key support levels.
McClellan's summation index (MT_SIGNAL) just turned negative, signaling a SHORT-TERM UPTREND under pressure.
Major indices are all at important resistance areas. If the uptrend is strong, we could find support around the 10dma and make a 2nd breakout attempt in these areas.
NQ_F: 12578/12801$ area
ES_F: 4137/4212$ area
RTY_F: 2030/2054$ area (approaching)
Stocks above 20 + 50dma are at overbought levels, and we are in an ST downtrend.
Many sectors are retesting KEY levels on low volume. XBI, SMH, IGV.
Even XLE was retesting a key support area and made a U&R setup with last Thursday’s low pivot. Many Energy stock setups tonight.
Overall, increasing numbers of interesting setups and retest of key areas in strong names
Semiconductors look ready to bounce tomorrow
Many Energy charts look great
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: downtrend (red) + ABOVE 10dma = SHORT-TERM UPTREND under pressure (🟨)
Tomorrow's economic news/events:
GAME PLAN:
Tomorrow if we reclaim 4187$ on ES_F and we can confirm it with an intraday BORS setup, I will look to add exposure within my progressive exposure parameters. We have to close strong and above that level to keep that exposure.
If we breakout for the current mini-channel DTL, I will try to be more aggressive as we might confirm the continuation higher.
If the market rejects 4137$ from the failed reclaim or we undercut the 4109$ & 10dma on volume, then I will start to cut back exposure to lighten up in what could be a longer & deeper pullback.
EXPOSURE MODEL:
PRIME_LIST (potential TMLs)
AEHR ALGM FOUR ELF LSCC BAND
AEHR: We are still building that BO10PB setup and made another 10dma retest today at the 34.98$ level. If we lose the 10dma & UTL, I will trim back exposure, but it’s now my largest position.
BAND: Inside day at the base high level. I like the support we saw, still above all, and showing constructive action.
FOUR: Inside day at base high level on decreasing volume again. Tomorrow will be necessary to determine which side we break.
LSCC: Volume is decreasing, and we are approaching the 10dma and 77.16$ base level. This is a setup we see in the majority of semiconductor names tonight. 2 days PB on very low volume right into the 10dma. Look for these mini-channel DTL breakouts tomorrow and they might give good early entries.
ALGM: Gap down. We could not make a green close today, so I would not be surprised if we are tired after the last five days’ run.
ELF: Inside day, still no play for me.
FOCUSLIST (LONG)
FOUR 67.62, AEHR 36.63, YPF 11.75, SMCI 85.95, XBI 90.78,
FOUR - Alert: 67.62, SL: 62.74
See PRIME_LIST.
AEHR - Alert: 36.63, SL: 34.56
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.
SMCI - Alert: 85.95, SL: 81.8
Very strong following the earnings report last week. This was one of the strongest names a couple of months back, and the last ER seems to have created demand from institutions again. The good thing is that when we look at the weekly chart, we are far from being extended with last week's 30wma bounce and possible DTL breakout tomorrow to confirm a WB setup if we can follow through and reclaim the 85.95$ level, we have a lot of space to run in a red-hot sector (SMH)
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.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES (Included in Discord membership):
Only 10% add on AEHR today
SECTORS PERFORMANCE
Leading sectors:
(SMH) Semiconductors - 2 days PB on low volume right into the 10dma and inside this mini-channel. Looking very constructive and healthy. On top of that, so many good-looking charts in this sector. If we cannot hold the 238.70$ level, then we might be in for a deeper PB here.
(TAN) Solar - Held the 50dma today, but overall not a very healthy pullback. ENPH earnings are tomorrow after-hours, so might be a slow day for TAN.
(XBI) Biotech - See FOCUSLIST
(XLE) Energy - Tried to reclaim the 50dma but got rejected and closed at the lows. This is a nasty candle…
(XME) Metals & Mining - Lost the 10dma today, but on light volume. Let’s see how we react tomorrow and at the 21dma if we go there.
(XRT) Retail - 71.89$ retest. We see the volume decrease in this pullback, but we’ll need more time to digest that last move as we were so extended from the 10dma.
(IGV) Software - 2 days pullback on decreasing volume and now at the 10dma. I think we will bounce here tomorrow. Watch for that channel breakout and first 10dma bounce. Otherwise, a 277$ base level retest is possible.
MARKET BREADTH & INTERNALS
$NYHL (Cumulative new 52W Highs/Lows & 50dma)
LT_SIGNAL: uptrend (black) + ABOVE 50dma = INTERMEDIATE-TERM UPTREND (🟩)
!MCSUMNYA (McClellan summation index & 10dma)
It turned negative today. This is my primary concern about this pullback, as this indicator/signal has been pretty accurate recently, and we were very extended already and at record levels. I’ll keep an open mind and follow the leaders & stocks first, but keeping that in the back of my mind.
MT_SIGNAL: downtrend (red) + ABOVE 10dma = SHORT-TERM UPTREND under pressure (🟨)
$NYMOT (McClellan Oscillator - Breadth extensions)
new low.
NYHL (New 52W Highs/Lows) - new low at 49 NNH.
NYAD (Net Adv/Decl) - Second day of large number of decliners.
$NYA200R (Stocks > 200dma - LT breadth) - Follow through down.
$NYA50R (Stocks > 50dma - MT breadth) - Follow through down.
$NYA20R (Stocks > 20dma - ST breadth) - New low.
VIX (Volatility S&P 500) - 21dma, DTL & 19.54$ rejection. If we can confirm that rejection with a downside follow-through tomorrow, then it will add conviction on the next market upside move.
DXY/TNX (US$) - We are right in that 103.58$ level & 50dma. Big tell tomorrow…do we reject or reclaim?
Credit Spreads (IEI/HYG) - short BORS setup at the UTL?
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
AEHR,ALGM,FOUR,OII,TGTX,RPD,MNDY,NINE,JXN,YPF,ELF,LSCC,HCP,PATH,RCL,CENX,BLDR,FLYW,DKNG,GTLB,
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,FOUR,RPD,OII,MNDY,YPF,PATH,JXN,NINE,LSCC,HCP,BLDR,CENX,FLYW,RCL,ELF,CCL,GPS,
Relative Strength 1 Month (1M-RS)
LCID,TGTX,CNK,AEHR,CHPT,PATH,ALGM,HCP,MNDY,RPD,MELI,PRVA,BTTR,SG,ABNB,CAR,NCNO,OII,GTLB,TOST,
Relative Strength 3 Month (3M-RS)
TGTX,RPD,FOUR,MNDY,AEHR,NINE,ALGM,DOCS,FLYW,PATH,LSCC,OII,HCP,CENX,YPF,DKNG,BLDR,AGNC,SPLK,JXN,
Relative Strength 6 Month (6M-RS)
NINE,TGTX,YPF,AEHR,OII,ELF,JXN,RCL,FOUR,ALGM,WNC,BAND,PRTA,GPS,INSW,PARR,CENX,VAL,ATI,IGT,
REFERENCES
Articles on the system:
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Hi Alex,
Thanks for the great insights. May I know what time frame you use for execution? I realize you reply in daily and weekly for the big picture but for actual trading how low do you go? 15m, 5m? Thanks! TT