Good evening folks!
Two weeks remain before the end of this horrible 2022 bear market year. Let’s close this year strong, and I’m already looking forward to 2023. It can’t be worst, right? :)
Alex ✌️
GENERAL MARKET ANALYSIS
S&P500 (SPY) Daily
Price Action Analysis:
SPY gapped down Friday right below the 50dma. After trying to reclaim it, we came down to retest the 382$ area. We could not push further than that and found some bids by the end of the day to close in the upper half of the day.
We are now pretty extended on the downside with those four last days’ moves, and we might see some consolidation or retest of overhead resistance in the next few days, IMO. We’d need that 10dma to catch up a bit if we were to really continue lower.
On the upside,
The 50dma will starts acting as potential resistance, along the 387/390$ area that we could come to retest in the next few days.
On the downside,
The 379/382$ area is where we are and need to hold for the market to stabilize and maybe bounce for a small reaction rally. If we lose that area, the 373$ level is my next potential support area.
NASDAQ (QQQ) Daily
RUSSELL 2K (IWM) Daily
Alex’s TAKEAWAYS
The market is still unhealthy and in a downtrend. That said, we might be short-term extended after a 6%+ indices move in only four days following last Tuesday's CPI report.
With that in mind, we also know that we are in the 50dma area and sitting at a pretty significant support area, so I would not be surprised if we bounce or at least consolidate in the next few days. For a downtrend to continue lower, we’ll need these natural reactions along the way. We’ll get more information on the bounces to know if that next leg is lower as some fuel or short-lived.
Time to take it easy, study, do some year-end post-trade analysis, and prepare for 2023.
Market health & Trend indicators:
LT SIGNAL: downtrend (red) + BELOW 50dma = BEAR market (🟥)
MT SIGNAL: downtrend (red) + BELOW 10dma = Downtrend (🟥)
Tomorrow's economic news:
Gameplan:
I still think this market is unhealthy, and I play the downside until proven otherwise. If we get a reaction bounce, it could be tempting to trade a few names long, but only intraday, and certainly not keeping exposure overnight.
That reaction bounce should also offer an opportunity to add to my existing short positions (SPXS+Ind names). In the next few days, I will look at the 387$ level very closely for a possible retest & rejection (BORS) to confirm that theory and add to my existing positions.
Until then, it’s sitting on my hands and waiting for a better R/R spot to play the market. We’re in no man’s land right now.
In the following sections of tonight’s letter, I’ll cover essential parts of my daily routine & preparation for tomorrow’s trading session.
✅ 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)
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