Alex's daily Market update & Focuslist - 11/20
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GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Friday, we had a pretty volatile & choppy OPEX (Options Expiration) day. Despite this action, we closed green and reclaimed the 3964$ area level which was important for me. We also made a higher low after the 10dma bounce on Thursday and broke out of the channel we were working in the 3 prior days. Overall, I see constructive action and still basing/consolidating in a very healthy way.
On the upside, If we can retake Friday’s high (3994$) that would be a good first step, then we would have to reclaim 4016$ level to really confirm the breakout and continuation higher.
On the downside, I want to ideally see 3964$ level hold, then Friday’s low. If we can’t keep these 2 levels, the 10dma would be the next potential support. 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.
I think that the Energy sector could really help the market here if we confirm the XLE 0.00%↑ set up as the individual names seem to anticipate. This still needs to be seen.
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:
This is not a swing or a position trading market right now until we resume the trend higher. (area reclaim)
If we reclaim that resistance area tomorrow and positions are working, I might increase my exposure by another 10-20% to be at a maximum of 30% invested. I still want to trim my positions by at least 50% EOD to finance the overnight risk.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
LONG FOCUSLIST
INSW 46.99, WFRD 43.72, CVI 41.31, PLAB 19.2, STLD 101.91, CPRX 15.95, SLB 53.89, PR 11.04
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: Retest of the DTL Friday, might be strong tomorrow.
ALERT: 46.99$
WFRD 🎖️
The strongest name of the last 6M & 3M (150% from the lows) is building a nice HTF setup right at the 10dma with higher lows. This is really a swing trading setup where I would take a trade the momentum & burst out of that DTL breakout and sell a lot into strength. These setups can run quickly way higher than everyone thinks, but they can also fail just as fast, as being “extended”. Good risk management is IMPORTANT here.
UPDATE: Retest of the UTL & closed pretty much unchanged.
ALERT: 43.72$
CVI
Another energy name setting up for breakout after the recent 21dma, base area, and DTL retest. If XLE is taking off tomorrow, this will certainly be a name to watch.
UPDATE: Pretty deep PB Friday, but got bought pretty hard just below the 21dma and closed unchanged and on volume.
ALERT: 41.31$
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: Opened above the entry pivot, but after early weakness, but never able to reclaim it.
ALERT: 19.20$
STLD 🎖️
Recent steel leader, we are putting some wild action at the 100$ level, and with today's 10dma bounce, we are looking ready for continuation on the retake of the recent swing high.
UPDATE: PB to the 10dma and closed unchanged.
ALERT: 101.91$
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.
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.
ALERT: 53.89$
PR
Energy stock with an initial 85% leg that led to a consolidation in the last few weeks. We just retested the 21dma and the recent support area as well. If we can reclaim the initial base breakout swing high would get me in.
ALERT: 11.04$
🎖️ = Alex’s highest conviction setups
SHORT FOCUSLIST
SECTORS PERFORMANCE
(XLE) Energy - Found support again at the area bottom level & the 21dma Friday. We are working on that mini-channel and a breakout of that DTL could really get this sector going with the breakout.
(XBI) Biotech - Small gap up, but still weak. I want to see a reclaim of 83.06$.
(SMH) Semiconductors - After an impressive rally, we are consolidation really well above all kma’s. I am still watching that resistance area and if we’ll be rejected or not.
(IGV) Software - Back into the support area after not being able to hold the gap Friday.
(PBW) Clean Energy - Not able to hold the gap too and still above the UTL. A reclaim of the 50dma would be very bullish.
(TAN) Solar - The strongest sector right now. Was a bit weak Friday, but still above all kma’s and within last Thursday’s range.
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - Back positive and trend up.
Trend @ -45 (⬆️)
NYAD (Net Adv/Decl) - Slightly down
20dma @ +340 (⬇️)
MMTH (Stocks > 200dma - LT breadth) - Gap up that held very well on a retest of the 42.19% level. This is very positive action.
MMFI (Stocks > 50dma - MT breadth) - Confirming the 10dma bounce, but still have to make a new high.
MMTW (Stocks > 20dma - ST breadth) - Respecting recent UTL and not being rejected by the 10+21dma. I like the action so far, I see a potential wedge being formed.
VIX (Volatility S&P 500) - Tried to reclaim the 10dma & 25.13 level, but got rejected hard and closed below all and below yesterday’s low. We followed through on that rejection Friday and closed just above the support area. Let’s see if we can break below here or bounce again.
DXY (US $) - Drifting higher into the 10dma, nothing dangerous here IMO.
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,RCL,PDD,WFRD,CHX,ELF,SMCI,INSW,TNK,DHT,BIIB,VAL,AEHR,PR,PSX,CCRN,CHGG,STNG,GPS,PTEN,
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)
ASC,RCL,PDD,GPS,WFRD,CHX,ELF,BIIB,LPG,DHT,INSW,SMCI,CCRN,CHGG,SHLS,VAL,AEHR,NAT,TNK,VCYT,
Relative Strength 1 Month (1M-RS)
SHLS,SPWR,TGTX,ARRY,RUN,VCYT,ENPH,GPS,PLNT,JD,ALGM,BAND,IGT,CERT,CHS,SMCI,ULCC,STEM,AXL,HIMS,
Relative Strength 3 Month (3M-RS)
WFRD,YPF,INSW,PDD,ASC,RCL,PR,ELF,SLB,CCRN,CHX,BIIB,TNK,XPRO,BHC,AEHR,GPS,VAL,NAT,TASK,
Relative Strength 6 Month (6M-RS)
AEHR,WFRD,ELF,INSW,YPF,ASC,PDD,CCRN,PR,TNK,BIIB,CHX,DHT,SLB,STNG,RCL,XPRO,CHGG,GPS,NAT,
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REFERENCES
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Great substack as always! Just one note: the economic calendar is not for next week but for the week after.