Alex's daily Market update & Focuslist - 11/21
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Good evening folks!
Hope you were able to stay safe today in that pretty volatile & choppy market. That’s typical Thanksgiving & World Cup week price action :)
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Alex ✌️
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Today, was pretty choppy & volatile all day long. We came down to retest the 10dma pretty early this morning and bounced pretty nicely, but never been able to reclaim the 3964$ level. We are making another higher low and that consolidation becomes even tighter.
On the upside, First, we need to reclaim 3964$….then Friday’s high (3994$) would be a good first step, then we would have to reclaim 4016$ level to really confirm the breakout and continuation higher.
On the downside, I want to ideally see Friday’s low hold. If we can’t keep these 2 levels, the 10dma would be the next potential support and would really have to hold again. The line in the sand for me to turn bearish would be a close below 3903$ & the 21dma.
NASDAQ (NQ_F) Daily
RUSSELL 2K (RTY_F) Daily
In the following sections of tonight’s letter, I’ll cover very important parts of my daily routine & preparation for tomorrow’s trading session.
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Alex’s TAKEAWAYS
The market is still in a confirmed uptrend and is showing constructive basing action. As long as we see this kind of support above the kma’s we have to assume that we are seeing a healthy pullback that worth playing carefully. The VIX is also confirming the rally by being rejected on every bounce and trending very tightly below all kma’s.
Note that this consolidation is getting tighter & tighter, eventually, we’ll break one side or the other with a powerful move. Which side is it…? I think the odds are higher for the upside, but I can’t know for sure and don’t need to predict either. The price will tell us very clearly when it happens.
Overall, despite the constructive action on the indices, we don’t see a lot of very strong sectors outside of XLE TAN & SMH, so for this rally to really materialize, we’ll need a much larger sector contribution. Until then, this market has everything to prove IMO. Stocks & Sectors leadership is very narrow, but breath is holding and improving.
Note that we are still in a very news-driven market and the geopolitical risk is very high with everything going on right now in the world. The latest that might have some impact is the Covid situation in China.
Gameplan:
Now that I increased my exposure to 30% like I wanted to do last night based on today’s positive action, I will keep the rest of the week pretty easy and manage my current positions.
We are in a very short trading week and the action might be slow & choppy again for the rest of the week. So be very careful to NOT overtrade and keep risk super tight.
There is maybe one name that I really want to get in and would consider adding if it’s acting well, it’s AEHR which I sold previously. I really think it has leadership potential.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
LONG FOCUSLIST
INSW 46.99, PLAB 19.2, CPRX 15.95, SLB 53.89, AEHR 24.65+DTL, ARCH 155.97, BTU DTL, LULU 355.59
INSW
Leading names in the past few months while trending and respecting the 21dma. We are now retesting that 21dma, so this might be a good spot to initiate a position for the next leg up. The DTL is where my alert will be.
UPDATE: Retested the 10dma and reclaimed the DTL.
ALERT: 46.99$
PLAB
A name with incredible fundamentals and just retesting the 10dma after the recent stage 1 base breakout. We might need more consolidation, but want to be ready in case we run here, so using the most recent swing high as a potential entry.
UPDATE: Still basing above the 10dma. Still higher low.
ALERT: 19.20$
CPRX 🎖️
Initial 180% leg that led to an 87D consolidation looking a bit like a C&H. We are really putting a fight at the base top area and we are now retesting that level on very low volume and above the 10dma. If we can reclaim the initial breakout swing high, We have a good chance of continuation.
UPDATE: Did pullback to retest the base structure and the 10dma today, but bounce very well and closed flat on the day. I have a position, but the entry pivot is still active.
ALERT: 15.95$
SLB
Energy stock with an initial 60% leg that led to a consolidation in the last few weeks. We retested the 21dma Friday and bounced pretty hard on it. We also broke out of last week's channel, so a reclaim of the initial base breakout swing high would get me in.
UPDATE: The energy sector took a hit today before recovering pretty aggressively on the OPEC+ news. I don’t like that kind of volatility, but this SLB recovered the best of all the names I was watching, so worth keeping an eye on it.
ALERT: 53.89$
AEHR🎖️
One of the names that I consider a potential leader is still holding the 21dma after a pretty aggressive rejection of the ATH resistance area. I took profit right at the top candle last week but will be looking to jump back in if it still builds a nice consolidation right below that ATH area. I am watching that 24.65$ level from Dec. 2021 swing high and also the DTL of the current pullback for an entry.
ALERT: 24.65$ + DTL
ARCH
Coal name still retesting the base area and holding the 21dma very well. That initial breakout swing high pivot will be where my alert will be set.
ALERT: 155.97$
BTU
Another Coal name that is set up pretty nicely. BTU was in the FL last week but was never really able to bounce from that DTL & 21dma retest. Now the 3rd time might be the good one. I would play the DTL for a possible entry.
ALERT: DTL
🎖️ = Alex’s highest conviction setups
SHORT FOCUSLIST
SECTORS PERFORMANCE
(XLE) Energy - Energy was selling off pretty hard this morning and finally reclaimed the 21dma after that OPEX+ news. Still in good shape for a potential bounce.
(XBI) Biotech - Not able to reclaim kma’s, still weak. Now at UTL, it’s really bounce or breakdown tomorrow IMO.
(SMH) Semiconductors - After an impressive rally, we are consolidating really well above all kma’s. I am still watching that resistance area and if we’ll be rejected or not.
(IGV) Software - Pullback continues on low volume and sitting at the kma’s and base bottom level. This is a make or break too tomorrow.
(PBW) Clean Energy - We are retesting the base area today. Make or break tomorrow.
(TAN) Solar - The strongest sector right now. Still above all kma’s and within last Thursday’s range.
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - oscillating around with a negative reading today.
Trend @ -32 (⬆️)
NYAD (Net Adv/Decl) - In the last 2 weeks, we are seeing a real compression and squeezing action here. We’ll break one side or the other and this will probably be powerful and give the market direction.
20dma @ +304 (⬇️)
MMTH (Stocks > 200dma - LT breadth) - 10dma support today, still in that channel
MMFI (Stocks > 50dma - MT breadth) - 10dma support today, still in that channel
MMTW (Stocks > 20dma - ST breadth) - Retest of the UTL and still within that wedge.
VIX (Volatility S&P 500) - VIX continues to trend lower and now closed just below the current cycle low, which is a pretty important price action after another 10dma rejection. This really gave me confidence in keeping exposure tonight and I think gives us an indication that we might resume the ST trend higher. Of course, if we make a double bottom and really hard here, this is a completely different story.
DXY (US $) - Rallied today, but still below all kma’s.
US10Y/TNX (US 10Y bond yield) - Still below all kma’s.
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
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LEADERS LIST
Overall leaders (PRIME Score)
ASC,PDD,RCL,WFRD,CHX,ELF,INSW,SMCI,DHT,TNK,BIIB,AEHR,PR,VAL,PSX,CCRN,CHGG,STNG,GPS,MMAT,
Fundamental leaders (FA Score)
NOG,RES,SIGA,PSX,ASC,DRH,TNK,ESTE,LTHM,CPE,CALM,PDCE,SWAV,RUN,MUR,PR,HGV,SM,TRIP,ERF,
Technical leaders (TA Score)
MMAT,ASC,RCL,PDD,GPS,WFRD,ELF,CHX,BIIB,DHT,LPG,INSW,SMCI,CCRN,SHLS,CHGG,VAL,AEHR,NAT,TNK,
Relative Strength 1 Month (1M-RS)
MMAT,SHLS,SPWR,TGTX,ARRY,RUN,VCYT,ENPH,GPS,PLNT,JD,ALGM,BAND,IGT,CERT,CHS,SMCI,ULCC,STEM,HIMS,
Relative Strength 3 Month (3M-RS)
MMAT,WFRD,YPF,INSW,PDD,ASC,RCL,PR,ELF,SLB,CCRN,CHX,BIIB,TNK,XPRO,BHC,AEHR,GPS,VAL,NAT,
Relative Strength 6 Month (6M-RS)
MMAT,AEHR,ELF,WFRD,INSW,ASC,YPF,CCRN,PDD,PR,TNK,DHT,BIIB,CHX,STNG,SLB,XPRO,SHLS,CHGG,RCL,
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Hey Alex, thanks for preparing your newsletter!
I have a suggestion. It would be nice if once a week you could include a new section explaining how you actually traded one of your suggestions (win or lose) and discuss it in detail. Time and value you entered and exited, what triggered this deal over other suggestions on your FL? Did you sell EOD or not? What other indicators did you check to confirm your decision?
Thanks!