Alex's daily Market update & Focuslist - 03/20
One more day before FOMC
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Price Action Analysis:
ES_F retested the 3898$ level last night but found support, and the dip was bought aggressively as we were already back green in the morning. That’s an impressive range; the level I watched was defended to the tick.
Today was mostly very choppy, with a small uptrend going into the close. We finally closed above the 21dma but just below the correction channel DTL. So we confirmed nothing on the upside today.
We’re still been in a downtrend for the last two months or so and haven’t received confirmation that it changed based on price action yet.
This will be a major week, with the interest rate decision & FOMC meeting on Wednesday, along with probably a lot of global Macro news. We can expect high volatility, and it will be hard to forecast which side the market will take in this type of market.
It’s best to define our bullish/bearish scenario and follow the price action. The market will tell us which side we’ll go to.
On the upside (bullish scenario),
First, I want to see a reclaim of the 21dma (done!), and then a breakout of the correction channel DTL, along with a push above 4016$, would be bullish.
On the downside (bearish scenario),
If we break that current bear flag UTL and break down from the 3898$ level, we would have good chances to follow through on a meaningful move.
NASDAQ (NQ_F) Daily
RUSSELL 2K (RTY_F) Daily
Alex’s TAKEAWAYS
I view today’s action as positive and constructive in the indices, with the 3898$ dip being bought and a close back above the 21dma.
Despite that, the breadth remains weak as we still have NNL with weak net advances. Even the A/D ratio was only 1.64, which is not the kind of thrust we need to see.
With FOMC on Wednesday, I am not sure we’ll have a strong push tomorrow, so we might have to be patient and see what Jerome Powell says in 2 days to see my bullish scenario being triggered and the breadth thrust we need to see to get more aggressive. But we never know, so we stay ready!
We still see many high-quality setups, and recent leading sectors like SMH, FDN & IGV are showing very constructive action…so despite being cautious, I see this current price action as being constructive and showing potential heading into FOMC.
One step at a time!
Market health & Trend indicators:
IT_SIGNAL: downtrend (red) + BELOW 50dma = INTERMEDIATE-TERM DOWNTREND (🟥)
ST_SIGNAL: downtrend (red) + BELOW 10dma = SHORT-TERM DOWNTREND (🟥)
Tomorrow's economic news/events:
GAME PLAN:
Tomorrow, it will all depend on whether we confirm my bullish scenario (DTL+21dma+4016$ reclaim). If we do, I might add a 5-10% exposure maximum if my current position gains traction and allows that new exposure.
If we don’t, I will only manage my current GFS position and stay put until we gain more clarity on this market. We remain in a heavily choppy market and have the FED/FOMC event on Wednesday.
This market is still news-driven, so we must build exposure cautiously.
FOCUSLIST (LONG)
ON 80.85, MELI 1223, AEHR 32.83, LSCC 93.35, ELF 75.41,
ON (BORL) - Alert: 80.85, SL: 77 / LOD
A semiconductor name (you have many choices ;)) that held the multi-month base area on this current pullback and bounced back above all kma’s today. I watch the DTL as an early entry or the recent swing high pivot.
Update: It tried to breakout from the DTL today but could not push decisively. We are still below the entry pivot for tomorrow.
MELI (BREAKOUT) - Alert: 1208, SL: 1167 / LOD
A recent leading stock is setting up for a classic base breakout. Solid fundamentals and RS in the last few weeks.
Update: It has not been able to follow through on the 21dma bounce today and closed below the 10/21dma. I would look at yesterday’s high to confirm an entry.
AEHR (WBPB) - Alert: 32.83, SL: 31.4 / LOD
One of the past six months’ leaders that is still building a larger multi-month base for about three months and also responded well to the early march Tesla battery news gap. Since then, we have built a wedge around the 50dma and recently built higher lows as we broke the DTL. We are retesting the 50dma and that DTL in the last two days, on very low volume.
LSCC (WBPB) - Alert: 93.35, SL: 88.79 / LOD
One of the semiconductor leaders and still acting well on that DTL retest. A move to new highs would confirm the breakout here.
ELF (BREAKOUT) - Alert: 75.41, SL: 72.28 / LOD
A name that still builds its base since the February PEG. We are now, above all kma’s, trying to breakout for that base.
INDICES TRADES (SPXL/SPXS)
If we don’t push much tomorrow, I will be interested in playing the 4016$ level breakout at FOMC with SPXL. Stay tuned tomorrow for more information.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
SECTORS PERFORMANCE
Leading sectors:
SMH Semiconductors
We found support just above the DTL and 5dma and closed higher than Friday’s open. If we breakout from that structure area just above, this would be very bullish for the entire market IMO.
FDN Internet
The Internet sector, one of the strongest of the past week, is working on a WBPB setup on that DTL & 50dma retest.
IGV Software
Also working on the WBPB setup as we held the DTL, structure and 10/21dma today.
TAN Solar
We were able to hold the 69.68$ level today but still below that 71.75$ resistance area. So, short BORS or follow through on the bounce attempt?
XBI Biotech
Still living below all kma’s but still with a HL.
XLE Energy
HL at the support area, this is constructive.
XME Metals & Mining
Rejected at the 5dma today. Do we follow through on the downside?
XRT Retail
Still below the 5dma.
MARKET BREADTH & INTERNALS
$NYHL (Cumulative new 52W Highs/Lows & 50dma)
We crossed below the 50dma, and switch to an IT-DOWNTREND signal. We’ll have to see how we react to this week’s action with FOMC & FED, but this is another sign to remain careful as the breadth remains very weak.
IT_SIGNAL: downtrend (red) + BELOW 50dma = INTERMEDIATE-TERM DOWNTREND (🟥)
$NYSI (McClellan summation index & 10dma)
ST_SIGNAL: downtrend (red) + BELOW 10dma = SHORT-TERM DOWNTREND (🟥)
$NYMO (McClellan Oscillator - Breadth extensions)
Rejection, but still building HH & HL.
Improving, but still negative.
NYAD (NYSE Net Advances/Declines)
Weak thrust today.
NYUD (NYSE Advances/Declines volume)
Bounce attempt.
$NYA200R (Stocks > 200dma - LT breadth)
U&R attempt.
$NYA50R (Stocks > 50dma - MT breadth)
double bottom.
$NYA20R (Stocks > 20dma - ST breadth)
Was not able to make a new HH, but remains with HL’s.
Another big 28$ rejection today, and we closed back below 25 and the 5dma. We remain elevated, but that’s constructive.
We broke below 103.58$ and the 50dma, so we can expect lower US$ prices if we follow through.
Still above base area.
Possible U&R setup in the bond yields.
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
ALGM,ELF,FSLY,LSCC,ANET,IOT,INDI,LNTH,AEHR,COIN,CARG,RBLX,FOUR,MPWR,ASAN,OKTA,MELI,PANW,FLYW,PATH,
Fundamental leaders (FA Score)
FRO,EURN,ALB,INSW,CALM,ASC,ELF,DHT,CPRX,MUR,H,PANW,ANET,HIMS,ALGM,LTHM,FTAI,AEHR,ARRY,AGNC,
Technical leaders (TA Score)
COIN,ALGM,BBIO,FSLY,RBLX,LSCC,ELF,IOT,CRM,ASAN,INDI,ANET,LNTH,MBLY,OKTA,MPWR,FTAI,HIMS,FOUR,AEHR,
Relative Strength 1 Month (1M-RS)
ASAN,ANET,COIN,IOT,LNTH,FOUR,OKTA,CRWD,CRM,RBLX,SRPT,DOCN,BBIO,MBLY,ALGM,LSCC,CUBE,PATH,STAA,FLYW,
Relative Strength 3 Month (3M-RS)
COIN,FSLY,BBIO,INDI,ASAN,RBLX,ALGM,LNTH,IOT,DKNG,HIMS,CRM,AEHR,FTAI,CNK,GLBE,ELF,LSCC,MPWR,APP,
Relative Strength 6 Month (6M-RS)
ALGM,AEHR,FSLY,ELF,RXDX,OII,LSCC,HIMS,NINE,SMCI,PARR,WFRD,IOT,FTAI,AIMC,COIN,MBLY,ANET,BLDR,OKTA,
REFERENCES
Articles on the system:
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