Alex's daily Market update & Focuslist - 01/08
MT_SIGNAL turned green --> Playable rally developing
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Price Action Analysis:
The market reacted positively to Friday’s US employment numbers and rallied hard on the news. It then followed through all day long with a powerful intraday trend. We finally closed above the 10 + 21dma, along the DTL we were watching from the recent swings high.
We were not quite able to breakout of the range box/consolidation area, but this is a GREAT first step.
We’ll have to take it day by day as we’re still below the 50dma, but as you’ll see in my takeaways, this might be the turn of a potentially meaningful playable rally. We have CPI data Thursday of this week, so obviously, this can change everything as we’re still in a news-driven market.
PRICE ACTION FIRST
On the upside,
The first significant level to look for tomorrow will be the 50dma, then if we can push through it, 3964$ is my next level of interest.
On the downside,
If we backfill early this week, I will look at the 21dma & 3898$ levels for potential support.
If we can’t hold these levels, I think this potential rally won’t be.
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
✅ 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
Friday’s reaction to employment data was a real expectation breaker on the indices. However, as noted last week, we were saying breadth improved throughout that consolidation. This was an excellent early signal that ended with the MT_SIGNAL crossing the 10dma on Thursday, which I did not believe at first… now we know that the internals were anticipating this reaction.
Will this be a multi-day/week/month rally? I don’t know. I know the probabilities are shifting on the long side, and we’ll play these odds as long as they are there. We will have our signal when things turn.
So day by day, we’ll follow price action & the trend.
Some observations:
ES_F closed above the 10+21dma, DTL, and almost out of the range box.
VIX with a BIG 50dma rejection and close below UTL and all kma’s.
DXY (US$) - BIG 105$ area rejection and close below all kma’s.
The 10Y with a BIG 50dma rejection and closed below UTL and all kma’s.
My MT-SIGNAL (McClellan sum. index & 10dma) is UP and CROSSED the 10dma. We can assume that the MT trend is UP, and we have a rally to play.
My LT-SIGNAL (Cumulative new 52W H/L & 50dma) is UP, but still far & below the 50dma.
Overall the breadth is solid and confirms this potential market turn.
DAY BY DAY
Market health & Trend indicators:
LT_SIGNAL: uptrend (black) + BELOW 50dma = BEAR market under pressure (🟨)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = UPTREND (🟩)
Tomorrow's economic news:
GAME PLAN:
ES_F closed above the 21dma, so my Exposure Model turned bullish and allows me to be 20% long exposed until the 10dma crosses the 21dma. Baby step. It’s not time to load the boat and be stuck in a rollover that can hurt our Equity Curve. Let’s build a cushion and see where the market heads before increasing our exposure as we get traction on our new positions.
EXPOSURE MODEL:
FOCUSLIST (LONG)
LABU 7.33, FOUR 56.94, LSCC 66.92, SMCI 85.95, AG 9.05,
LABU - Alert: 7.33, SL: 6.57
Biotech is a sector I’ve been looking at closely for a while as it’s building a very tight & long consolidation following the Sept/Oct. WB. I will look at LABU (3x ETF) to play the sector on a new structure high (above 7.33$ recent swing high).
FOUR - Alert: 56.94, SL: 52.45
It could not break down from the false breakout and made a higher low at the 21dma. I will look at the initial breakout candle high pivot for a continuation confirmation. This as been one of the strongest stock of the past weeks, not it showed that it holds the breakout level.
LSCC - Alert: 66.92, SL: 63.91
Semiconductors failed to break their bear flag to the downside and rallied hard Friday. I will look at that sector for potential positions as many stocks are in the 50dma after that recent consolidation. The fact that we can hold the 50d is a big tell for me. LSCC is still in the bear flag, but if we can breakout off the recent swing high pivot, along with closing above the 10/21dma, we could see the trend resume higher.
SMCI - Alert: 85.95, SL: 79.63
Another name in the semiconductor space that I thought would roll over following the 50dma break on Thursday. We pushed hard Friday and closed above the 10/21dma. I will be looking at the last earnings pivot high, which is an important level that we’ve acted around in the last couple of weeks. It would also coincide with the recent consolidation DTL breakout that could fuel things up.
AG - Alert: 9.05, SL: 8.43
Silver/Gold sectors are strong and AG is a name I’m looking closely for an entry. We retested the UTL Friday, and we bounce really hard and closed the day with a new swing high and above the 50dma. Here again, the DTL breakout could fuel things up.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
SECTORS PERFORMANCE
Leading sectors:
(XBI) Biotech - The chop fest continues… but we are building the right side nicely. We retested the DTL & 10/21dma again on Friday before closing just above the 83$ level.
(GDX) Gold miners - BORS confirmed as we followed through on the 30$ level retest. Trend is confirmed.
(XLE) Energy - Energy is still in the box and just got rejected at the 50dma Friday. With the Crude Oil chart, I would be cautious about playing the Energy/Oil sector.
CL_F (Crude Oil) - Tried to rally on Friday but got rejected. Bounce is weak.
(XME) Metals & Mining - Powerful breakout on volume Friday. We closed above all kma’s and above the recent base area.
(XLV) Healthcare - Healthcare continues to hold at the 50dma, and Friday could be a nice shakeout to fuel things up.
Sectors on watch:
(SMH) Semiconductors - Expectation breaker as we were now able to break the bear flag on the downside, and rallied hard out if it, and closed above the UTL & all kma’s.
(TAN) Solar - We are still below all kma’s and the recent resistance area…but Friday’s volume is interesting to note.
MARKET BREADTH & INTERNALS
$USHL (Cumulative new 52W Highs/Lows & 50dma)
Still on bear market signal…BUT still UP. We are on a BEAR market under pressure signal.
LT_SIGNAL: uptrend (black) + BELOW 50dma = BEAR market under pressure (🟨)
!MCSUMNYA (McClellan summation index & 10dma)
We confirmed the 10dma cross on Fridays, along with getting price confirmation on ES_F. This MT_SIGNAL now turned to an UPTREND.
MT_SIGNAL: uptrend (black) + ABOVE 10dma = UPTREND (🟩)
NYHL (New 52W Highs/Lows) - Continues to increase. Breadth is strong.
NYAD (Net Adv/Decl) - Strong thrust Friday, above 2000 advances.
MMFI (Stocks > 50dma - MT breadth) - Big range breakout on the stocks above their 50dma.
MMTW (Stocks > 20dma - ST breadth) - The ST breadth continues to strengthen
VIX (Volatility S&P 500) - BIG 50dma rejection and close below UTL and all kma’s.
DXY/TNX (US$) - 105$ area rejection and closed below all kma’s. We are still above the 103.58$ low, but this is a pretty big rejection signal. If we break lower, this will undoubtedly help the equity market uptrend.
US10Y/TNX (US 10Y bond yield) - Big breakdown on the 10Y as well. 50dma rejection and close below all kma’s.
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
CPRX,OII,ELF,TGTX,RIG,WMG,SMCI,AEHR,YY,CPRI,COTY,FOUR,SEAS,IGT,VAL,RCL,SPR,CCL,CLF,NLY,
Fundamental leaders (FA Score)
NOG,FRO,CALM,PR,RUN,AEHR,HGV,GFS,JXN,LBRT,DVAX,CEIX,DK,PBF,ALB,LYV,EURN,NEX,SMCI,PTEN,
Technical leaders (TA Score)
TGTX,OII,CPRX,RIG,WMG,ELF,CPRI,COTY,YY,HAL,SMCI,SEAS,AEHR,FOUR,SPR,IGT,BAND,CLF,LW,VAL,
Relative Strength 1 Month (1M-RS)
TGTX,RIG,OII,SPR,FLYW,CYTK,HAL,COTY,DLO,PBF,CLF,BTTR,CPRX,LW,MNDY,SEAS,VAL,FOUR,WMG,SABR,
Relative Strength 3 Month (3M-RS)
TGTX,OII,BAND,WMG,CPRX,RIG,ELF,CPRI,COTY,YY,SMCI,NLY,IGT,CCL,SPR,AEHR,HAL,PLNT,ALGM,SABR,
Relative Strength 6 Month (6M-RS)
AEHR,CPRX,TGTX,SMCI,OII,ELF,WMG,RIG,FOUR,CPRI,RCL,INSW,BAND,YY,ALGM,IGT,VAL,HAL,SEAS,ARRY,
REFERENCES
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