Alex's daily Market update & Focuslist - 06/01
Big reversal as breadth expend and we see small-mid cap stocks outperform for the first time in a while.
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Enjoy tonight’s letter!
Alex ✌️
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GENERAL MARKET ANALYSIS
NASDAQ (NQ_F) Daily
Price Action Analysis:
NQ bounced from the 14284$ level and the 5dma today. This is impressive action. We did not make a new high to really confirm the trend continuation, so a breakout of the 14570$ pivot will be on watch tomorrow.
We are now 9.1% above the 50dma, so still ST extended.
We remain in an uptrend, above all kma’s.
RUSSELL 2K growth (IWO) Daily
Price Action Analysis:
IWO led today, and that’s what we’ll want to see in the next few days as we try to catch up with recent NQ strength. If we can see this RS follow through tomorrow, it’s looking good for a potential channel & range breakout.
Today, we confirmed the bounce from the 224.45$ level and reclaimed all kma's & AVWAP. This is also a first that today we outperformed the major indices. This is good news for growth.
Buyers are still showing up. This is constructive.
S&P500 (ES_F) Daily
Price Action Analysis:
ES did exactly what we had to do today. We bounced from the 10/21c & AVWAP and reclaimed the 4200$ level.
Today's bounce was the reclaim after a big base false breakout/shakeout. These kinds of moves tend to lead to sustain moves, but we’ll see. One day at a time.
That’s also the stage 1 base breakout, so important breakout if we follow through tomorrow.
PT_UL BREADTH & INTERNALS
Price closed POSITIVE and outperformed the major indices (NQ/ES/IWO/RTY) and ABOVE all kma’s.
Breadth was POSITIVE with a good UP volume, and participation expended with a +48% UP day.
MSCI uptrend + BELOW 10dma.
3.3x daily momentum. (OK)
NNH at +6 (12th in a row)
The market model is now on an ORANGE signal (🟧)
Bottomline: We bounced where we had to, and breadth confirmed that move with small/mid-cap growth stocks outperforming the rest of the market. This is very constructive, but we could not get multi-days positive breadth recently, so will this time be different, and can we see a breadth expansion on multiple days? We’ll see!
Internals
Getting murdered and breaking down from kma's rejection and below that recent swing lows UTL. This is exactly what we want to see to confirm the ES_F move today.
MOVE (Merrill Lynch Option Volatility Estimate - Bond market volatility)
Big break below all kma’s. That’s what we want to see.
ST downtrend continues as we are now below the 10/21c, but right at the 72/89c which could act as potential support.
Faded the gap and closed flat.
Looks very toppy… and broke the 10dma and recent structure level today. Let’s see if we can follow through on that reversal.
BTC/USD (Bitcoin)
BTC is still retesting the 72/89c and 26553$ level.
SECTORS ANALYSIS
1M & 5D Relative Strength (SPY) sectors performance:
Leading sectors:
SMH Semiconductors: ST extended - Held the 5dma today, but was not able to reclaim the high AVWAP. I still think it needs more time to consolidate after the fast move we had.
XLK Technology: ST extended - 5dma bounce today too, and we reclaimed that H_AVWAP. We are still below the high pivot, so we might need to build below in the next few days.
IGV Software: ST extended - 5dma bounce today too, and we reclaimed that H_AVWAP. We are still below the high pivot, but not by much. This shows a lot of strength, even more, if we can breakout to new high tomorrow.
CIBR Cybersecurity: 5dma bounce today too, and we reclaimed that H_AVWAP. We are still below the high pivot, so we might need to build below in the next few days.
FDN Internet: 5dma bounce and reclaimed the recent swing high pivot to make a new high today. Leading ST.
Sectors potential playable setups :
ITB Home Builders: We got an outside bullish reversal today, as we held and defended the base area. We are still below the 10/21c, so a reclaim of tomorrow would be very constructive. Still looking very good.
TAN Solar: One of the sectors to watch tomorrow as we followed through on the base area reversal of yesterday. We reclaimed the 10/21c and AVWAP, so if we breakout from that DTL tomorrow, we could get going. SOLAR stocks are also setting up very nicely as a group to confirm the potential setup.
XBI Biotech: Another high-potential sector setup to watch closely tomorrow is biotechs. Setting up for a beautiful low cheat breakout at the 72/89c & 10/21c + AVWAP pinch. Good R/R here in a recent leading sector.
XLY Consumer discretionary: It looks like it wants to confirm the breakout with a 10/21c bounce & recent pivot high pivot reclaim today. It looks good with a constructive volume profile on the right side.
ROBO Robotics & Automation: Same setup as XLY, coming from a very long base. There is a lot of potential in this sector as well.
FOCUS & LEADERS LIST
VCYT (BO10PB) - Alert: 26.43, SL: 25.09 / LOD
One of my position is still building base on bases at the 10dma and right below the important base area above. If we can reclaim the recent swing high pivot, I will look to add it back to my core for a possible breakout. Nice volume profile and bounce today.
UPDATE: nice follow through, but couldn’t breakout.
CRSP (BO10PB) - Alert: 65.5, SL: 62.75 / LOD
It tried to breakout today but failed at yesterday’s high pivot. Still in play.
UPDATE: inside day
MARA (BORL) - Alert: 10.2, SL: 9.01 / LOD
Crypto stocks seem to be setup as a group, so if BTC/Cryptos is showing strength tomorrow, these stocks will give good entries after a few weeks of consolidations.
UPDATE: nice follow-through, but still below the entry pivot. In play.
SHLS (WBPB) - Alert: 24.61, SL: 23.03 / LOD
The top name I'm looking at in the solar sector. Like the fundamentals with constant growth and profitable for now, the last five last Q. We held the PEG gap, 10/21c & 72/89c, while digesting the move and while the sector was pulling back. This is a less-known name, but I like the potential.
ARRY (WBPB) - Alert: 23.4, SL: 21.98 / LOD
Similar setup as SHLS, as we retested the 21dma following the last earnings run. This is setup up nicely just below the base area.
SWAV (BO21PB) - Alert: 284.62, SL: 272.55 / LOD
BO21PB & Cup&Handle. Getting super tight and showed a lot of RS in the handle build while the sector was having it rough—classic CANSLIM cup at the 10wma. Bill O’Neil would be all over it.
PGNY (BO21PB) - Alert: 38.42, SL: 36.68 / LOD
BO21PB & BORLish at the base area. Also getting AVWAP pinch.
UBER (BORL) - Alert: 38.66, SL: 37.27 / LOD
BO21PB post PEG and AVWAP pinch.
LMND (BO10PB) - Alert: 18.29, SL: 17.1 / LOD
BORL and already above AVWAP and about to break new highs. It could be a fast mover. Solid fundamentals.
LEADERS LIST
Overall leaders (PRIME Score)
ELF,CELH,SDGR,MAXN,SWAV,EXAS,IMGN,CRSP,STNE,MARA,RCL,DUOL,APLS,DT,ARRY,RDFN,MDB,SHOP,DKNG,TGTX,
Fundamental leaders (FA Score)
RCL,ELF,NCLH,CELH,TMDX,DT,WNC,HTGC,SDGR,EXAS,CRSP,ALGM,ARRY,CSIQ,ALB,MGM,CALM,PANW,EQC,SEDG,
Technical leaders (TA Score)
IMGN,SMCI,PLTR,NVDA,APP,RMBS,ASAN,MARA,SDGR,MAXN,ELF,TGTX,MDB,ACVA,DUOL,CELH,RDFN,EXAS,HUBS,S,
Relative Strength 1 Month (1M-RS)
SMCI,PLTR,PSTG,IMGN,NET,MNDY,NVDA,AEHR,RMBS,ASAN,VRT,COHR,ACLS,LMND,ZS,MCB,ENTG,SDGR,MPWR,EXTR,
Relative Strength 3 Month (3M-RS)
IMGN,SMCI,PLTR,APP,TGTX,NVDA,MAXN,STNE,ASAN,MARA,CELH,SWAV,RMBS,SHOP,ACVA,ELF,SDGR,MDB,RDFN,DUOL,
Relative Strength 6 Month (6M-RS)
IMGN,TGTX,SMCI,NVDA,PLTR,APP,DUOL,SDGR,ACVA,ELF,MARA,RMBS,RDFN,MDB,ACLS,EXAS,MAXN,APLS,HUBS,ASAN,
Alex’s TAKEAWAYS & GAMEPLAN
Things can change quickly in the stock market, especially when we are at a pivotal point like we were.
I like what I saw today, but the action is very constructive, IMO.
ES, one of the best proxies of the general market, reclaimed the 4200$ level today after a shakeout attempt. This kind of reclaim after a shakeout normally leads to a sustained move. Nothing is guaranteed, but I like the odds.
We are seeing the leading & extended sectors holding their 5dma and showing signs of strength on that current PB, even if they were very extended. While it happens, we see a rotation into small/mid-cap and growth stocks, which we didn’t see recently. PT_UL & IWO outperformed the other indices today.
We also see the rotation into other sectors like TAN, XBI, XLY, ITB & ROBO. In other words, the breadth is widening.
Most importantly, there has been an ABUNDANCE of setups in the last few days. Let’s see if they follow through, but by itself is pretty constructive.
Here are couples of things I’ll watch tomorrow:
NQ is bouncing at the 5dma and back to a 9% extension from 50dma.
ES reclaimed the 4200$ level and confirmed the stage 1 base breakout. This is a big breakout…
IWO bounced where it had to and outperformed major indices.
TAN, XBI & XLY are the sectors to watch tomorrow for low risk entries.
Breadth turned positive today and was pretty strong. We need to see a FOLLOW-THROUGH, which we missed in the last breakout attempt.
VIX is getting murdered and breaking down from kma's rejection and below that recent swing lows UTL. This is exactly what we want to see to confirm the ES_F move today.
GAME PLAN:
Exposure model = ORANGE signal (🟧)
Back to opening exposure as my progressive exposure and open heat parameters allow me: one day and one stock at a time.
Economic news/events:
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
PRIME MODEL SPREADSHEET (PT_database)
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REFERENCES
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Hello Alex! one question on your SWAV trade. Why do you take May 22th high (284.62) as a pivot instead of May 23th (285.37)? Thanks in advance. HGD!