Tomorrow is CPI, are you ready for some fireworks?
Tonight’s letter might be a bit lighter on the analysis side, as everything will depend on the news tomorrow morning at 8:30 (EST).
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GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Today, we confirmed the WBPB setup on ES_F as we retested the recent structure and got rejected by it, losing all kma’s and closing below the 3780$ I was watching closely last night. This is a proper short setup that I would normally initiate a position on…but with CPI tomorrow, anything can change pretty quickly on either side.
Tomorrow, it’s all about CPI… but if we have a lower-than-expected inflation report, watch a reclaim of the kma’s & close above 3820$ level or even better, above 3855$. On the downside, I think that if we lose 3735$, it could get really ugly and 3600$ area can come really quickly into play.
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
Everything will depend on the CPI report tomorrow, but it is interesting to note that internals & breadth is deteriorating and potential long setups are all getting sold into pretty hard in the last 2 days. We also saw the Energy sector selling hard today at new highs. If this sector joins the selling party…buckle up it could get really ugly.
What I like:
None…
What I don’t like:
Breadth deteriorate again and my MBI score (Market Breadth & Internal) went from 17 to 8 in 2 days.
The VIX followed-through
DXY bounces off the 110$ level and support area
If Energy/Oil sector joins the selling party too...this could get ugly. (double top on XLE?)
Crypto follow-through on the puke
ES_F was rejected very hard today at the 3855$ resistance level retest and confirming a short WBPB setup.
Gameplan:
Tomorrow I will be on the road and not able to really trade actively, so I don’t plan to be very active. There are no good-looking long setups right now, so if we get a soft CPI, I might only open an SPXL/TNA position giving the time for the setups to form in the next few days. On the downside, if we sell off on the news, I will certainly try to find a good intraday pullback to jump in SQQQ. Also, as the news is pre-market, be careful to jump in too early before opening as we often see a reversal at the open that can be hard to manage. Best to wait for the reaction to jump in.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
No trade today
LONG FOCUSLIST
🎖️ = Alex’s highest conviction setups
SHORT FOCUSLIST
AMBP UTL, UBER 26, PL 5.08, ABNB 94.27, TDOC 26.4,
AMBP 0.00%↑
Pullback into the 21dma following the base breakout. I would short on the UTL breakdown.
ALERT: UTL
SETUP: BORL
UBER 0.00%↑
We’ve been pretty weak since ER and were not able to hold the 50dma and now testing the low area of the base. If we breakdown from here, we could cascade down.
ALERT: 26.00$
SETUP: BREAKOUT
PL 0.00%↑
A recent short FL name simply needed another leg higher in that UTL retest. Now the short setup seems mature and that final UTL & 50dma retest seems like the kiss of death.
ALERT: 5.08$
SETUP: WBPB
ABNB 0.00%↑
Never been able to reclaim even the 10dma after losing the UTL on a huge gap-down on the last ER. This could move fast as a continuation gap-down move.
ALERT: 94.27$
SETUP: BORS
TDOC 0.00%↑
We were building a pretty large base that we broke below last month, only to reclaim on ER…but we have never really been able to stay above the 50dma and now volume seems to pick up as we’re now below all kma’s.
ALERT: 26.40$
SETUP: BO50PB
🎖️ = Alex’s highest conviction setups
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - Starting back down again
Trend @ -172 (⬆️)
NYAD (Net Adv/Decl) - That’s a big negative thrust today
20dma @ +278 ⬇️)
MCOSINYA (McClellan Oscillator) - Big drop today
20dma @ +127 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - Double top reversal and closed below the 10dma for the first time of the entire rally.
MMFI (Stocks > 50dma - MT breadth) - Double top reversal and closed below the 10dma for the first time of the entire rally.
MMTW (Stocks > 20dma - ST breadth) - lower low reversal and closed below the 21dma for the first time of the entire rally.
VIX (Volatility S&P 500) - We followed through on the bounce today and closed above the 10dma.
DXY (US $) - Bounced and closed above 110$ important level and base area today. We are still below all kma’s, but that’s still an important support area.
US10Y/TNX (US 10Y bond yield) - Lost the 10dma and closed right at 4.08$ pivot.
IEI/HYG (Credit Spread) - ok… Credit Spread is definitely snigging something. BIG move above all kma’s and above the recent DTL and base area.
BTC/USD (Bitcoin) - BTC selling continues… I am watching 13880$-ish area for potential support in the next days/weeks.
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
(XLE) Energy - Big reversal today in the Energy sector that was leading the market for the last 2 months. This is looking like a potential double top… First, close below the 10dma since the entire run. (crazy how this correlate with the Breadth price action right)
(XBI) Biotech - XBI confirmed my bearish
(SMH) Semiconductors - We followed through on the base area reversal today and closed right back at the 50dma. Still looking healthy to me…
(IGV) Software - Confirming the 10dma rejection today and looks like a potential short setup going into tomorrow.
(PBW) Clean Energy - PBW now look like a proper short setup too with that UTL breakdown.
(TAN) Solar - big reversal at the 50dma today. Let’s see if we follow-through tomorrow…but not looking too good.
PRIME MODEL SPREADSHEET (PT_database)
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LEADERS LIST
Overall leaders (PRIME Score)
ASC,INSW,RES,WFRD,PBF,DO,ELF,XPRO,PR,CHX,APA,SLB,AEHR,ENLC,EURN,MRO,SMCI,PDCE,NOV,TNK,
Fundamental leaders (FA Score)
NOG,RES,SIGA,WTI,ASC,DRH,TNK,ESTE,JXN,LTHM,CPE,CALM,PDCE,SWAV,RUN,MUR,TALO,PR,SM,TRIP,
Technical leaders (TA Score)
INSW,WFRD,ASC,CHX,SLB,ELF,XPRO,DO,PBF,NOV,APA,RES,NE,MRO,HAL,ENLC,SMCI,PR,FRO,AEHR,
Relative Strength 1 Month (1M-RS)
VCYT,BAND,CHX,ULCC,CAR,ARRY,ASC,WE,CNK,XPO,SMCI,IGT,ALGM,VIR,ELF,CENX,PTEN,NE,WFRD,INSW,
Relative Strength 3 Month (3M-RS)
YPF,WFRD,INSW,SLB,CHX,CCRN,ASC,PR,XPRO,PBF,APA,MRO,ELF,MUR,DO,RES,PUMP,TNK,HAL,ERF,
Relative Strength 6 Month (6M-RS)
INSW,YPF,AEHR,WFRD,ELF,CCRN,ASC,TNK,ARRY,STKL,STNG,CHX,SLB,CPRX,PBF,DHT,PAYO,EURN,XPRO,PR,
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