Good evening traders! 👋
What we’ll cover in the Newsletter tonight:
General market analysis ($NQ/$ES levels)
Market Breadth & Internals (Risk model)
Prime Model spreadsheet (PT_database)
Economic Calendar
Sectors Review
Alex’s TAKEAWAYS (+Gameplan)
Leaders list
Alex’s Portfolio update
LONG Focuslist
SHORT Focuslist
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Alex ✌️🛡️
GENERAL MARKET ANALYSIS ($NQ/$ES levels)
NASDAQ ($NQ) Daily
Today, NQ powered higher with a breakout of the 11534$ & 11689$ levels, to finally close right in that resistance area. GOOG 0.00%↑ & MSFT 0.00%↑ then reported eanrings after market close, and both were down 7% on the news and they took away the indices with them.
The indices ARE NOT THE MARKET…here’s a little thread to understand the impact of those 2 earnings on the NQ & ES prices. It might not be as bad as we think….but we’ll need confirmation tomorrow.
Tomorrow, We really want to see how the market will react to this gap down. If we can reclaim 11534$ level, this is super positive. If not, then I want at least to see the market hold the 21dma.
$NQ levels on the upside (resistance)
11534$ level (Sept. structure)
11689/11794$ area (May/June/July structure)
the 50dma (!!)
$NQ levels on the downside (support)
11253$ level (recent swing low)
11068$ level (3 Oct. low)
10845/10890$ area (2020 structure / June low)
S&P500 ($ES) Daily
$ES levels on the upside (resistance)
3855/3903$ area (May/June/July structure)
the 50dma
$ES levels on the downside (support)
3780$/3735$ area
3639$ last week swing low pivot
3596$ level (2020 structure)
3509$ level (2020 structure)
3388$ level (2020 structure)
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - Very good improvement here today as we are almost switching positive here @ -43 NNL.
20dma @ -329 (⬆️)
NYAD (Net Adv/Decl) - That’s a big breadth thrust here with 2213 advances. That’s the kind of broad push we want to see. 20dma is now positive!
20dma @ +72 (⬆️)
MCOSINYA (McClellan Oscillator) - McClellan with a big pop today, now @ 215 and getting in the “extended” area of >200. above 250 is really where I look for potential reversal. Not there yet, but will begin to monitor closely for a potential sideway action or market pullback.
20dma @ -32 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - LT breadth with a BIG thrust out of the 50dma & base area. This is looking really good underneath and we can now aim 34.16% for the next potential resistance area.
MMFI (Stocks > 50dma - MT breadth) - MT breadth with a BIG powerful thrust from the 50dma breakout as well. We are approaching a possible resistance area and the next 57.87% recent structure high.
MMTW (Stocks > 20dma - ST breadth) - ST breadth approaching overbought levels and I would expect a pullback very soon (if not tomorrow with GOOD & MSFT earnings?) We are getting to those areas where reversal happens and we can expect some sideways action or PB.
VIX (Volatility S&P 500)- VIX continues to tell the story of that rally. A big breakdown from the 30$ area and now approaching the 50dma & recent structure area. We could see a potential reversal here on the VIX, but otherwise, we want to see that 50dma being broken soon and start trending below it if we really want to be in a RISK-ON market.
DXY (US $) - Don’t search too far why the market rallied so hard today, the US$ was down more than 1% and losing the 10/21dma. We are now sitting at the 50dma, so we bounce or cut through it…? tomorrow is a big day here!
US10Y/TNX (US 10Y bond yield) - The 10Y also relieved some pressure on the market today. Big drop in the yields as the bonds rallied. We are now back at the 10dma and we’ll have to see if we cant come back to the 4% level. This is a first step in the right direction and is very good for the equity market.
IEI/HYG (Credit Spread) - Rejected 1.56$ level and closed to new lows. Good!
BTC/USD (Bitcoin) - Bitcoin confirming the WBPB I talk about yesterday and played with BITO. This is a very good first step to breaking that DTL and close above all kma’s AND the multi-month base area. 20381$ is a big level that we’ll have to breakout tomorrow if we want to get a chance to continue this rally. I’m watching bitcoin a lot recently to get an idea of the risk appetite in this market.
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Sectors Relative Strength - Weekly (RS vs SPY)
Top 3: SMH - IGV - XLE
(XLE) Energy - The energy sector seems to go sideway a bit here, which is only positive to let kma’s catch up a bit without a big reversal. I really like the action of this sector.
(XME) Metals & Mining - XME confirmed the 50dma & base breakout today by doing a new high. This is really good action and I expect continuation & trending action in the following days.
(XBI) Biotech - DTL breakout and now above the 10/21dma. I want to see a breakout above 81.75$ & the 50dma for a real confirmation of a trend shift.
(SMH) Semiconductors - We managed to close above the 21dma today, but not a lot of strength tbh. I was expecting more strength today and a close above 189.94$ base level. We’ll have to see tomorrow, but keep in mind that we’re still in a downtrend and below the 50dma.
(XLF) Financials - 50dma & recent swing high pivot breakout today. good action.
(FDN) Internet - Big confirmation after DTL breakout as we pushed 3.6% higher and closed above the 50dma. Strong sector.
(IGV) Software - Big confirmation after DTL breakout as we pushed 2.5% higher and closed above the base area.
Alex’s TAKEAWAYS
I really like what I see under the good as breadth is strong and improving. We are approaching oversold conditions in faster/ST indicators, so a PB can come soon, but overall I like how this rally seems to get more & more participation. The only thing of course if how this market will react to GOOG & MSFT earnings….
Gameplan:
Considering that gap-down and earnings, I will want to sit on my hands and manage my positions at the open and see if any SL are triggered. I want to see how the first 30-60min go before doing any buying. If the market rallies after the first hour, I might get tempted to add another 10% exposure and see if the 10dma close above the 21dma and if my position gives me the cushion to push my progressive exposure up to 40%. If everything holds & the market rally, then I’ll add some. I don’t want to be too aggressive as ST breadth indicators are entering potential reversal/PB area.
LEADERS LIST
Overall leaders (PRIME Score)
WTI,HLIT,YPF,AEHR,PBF,PR,CVI,MUR,PAYO,DO,ERF,DVN,DEN,FANG,CCRN,PARR,XPRO,NOG,MRO,WFRD,
Fundamental leaders (FA Score)
RES,AMR,HCC,MRO,ERF,DVAX,MGM,DRH,TELL,BHF,ENLC,SWAV,TRGP,WTI,HLIT,DK,MPC,FANG,KOS,ARCH,
Technical leaders (TA Score)
AEHR,WTI,YPF,PARR,PAYO,HLIT,CVI,DO,XPRO,PBF,MUR,PR,SLB,WFRD,NOV,CCRN,SWAV,DVN,VAL,DEN,
Relative Strength 1 Month (1M-RS)
MARA,CAR,NEX,PARR,WTI,PR,XPRO,CVI,MUR,NOV,SLB,PUMP,CPE,HAL,DO,MTDR,AEHR,TALO,ESTE,APA,
Relative Strength 3 Month (3M-RS)
APDN,YPF,AEHR,WFRD,NTNX,INSW,WTI,XPRO,ZETA,XMTR,STEM,TOST,TNK,FUBO,DO,PR,CAR,RCL,HLIT,DEN,
Relative Strength 6 Month (6M-RS)
AEHR,ARRY,STNG,TNK,INSW,YPF,RXDX,STKL,TH,MRSN,PAYO,CCRN,CPRX,SWIR,HLIT,CVI,ELF,STEM,WTI,SWAV,
PT PORTFOLIO UPDATE
Intraday/Closed trades:
None other than the new BITO & YPF adds
LONG FOCUSLIST 📈
STNG 49.26, NAT 3.34, DINO 61.11, CF 108.3,
STNG
Shipping name that showed very good RS following its base breakout. We are now making a potential low-risk entry off the 10dma pullback at the recent base area. (BORS+BO10PB setups).
Entry: recent swing high pivot @ 49.26$
NAT
Came back in the base following the recent base breakout, but just reclaimed it on power and just made a nice little flag to the 10dma. I will be looking at the breakout of that flag and reclaim of the recent swing high for an entry
Entry: recent swing high pivot @ 3.34$
DINO
Oil name setting up a perfect BORS setup with the 58.64$ earlier entry pivot retest. I like how we just broke out of the ST DTL with a higher-than-average volume. Leading sector.
Entry: recent swing high pivot @ 61.11$
CF
Another stock in a stock sector (fertz) is setting up nicely just below the base area for a potential breakout. I like the action today, reversing the entire Monday’s action right below the base area. I will play the recent structure @ 108.30$.
Entry: recent swing high pivot @ 108.30$
SHORT FOCUSLIST 📉
🎖️ = Alex’s highest conviction setups
NOTE: I have the discipline to build a detailed FocusList each night, but I want to emphasize that I 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.
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REFERENCES
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