Good evening traders! 👋
What we’ll cover in the Newsletter tonight:
General market analysis ($NQ/$ES levels)
Market Breadth & Internals (Risk model)
Prime Model spreadsheet (PT_database) (NEW!)
Economic Calendar
Sectors Review
Alex’s TAKEAWAYS (+gameplan)
Leaders list
Alex’s Portfolio update
LONG Focuslist
SHORT Focuslist (NEW!)
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Alex ✌️🛡️
GENERAL MARKET ANALYSIS ($NQ/$ES levels)
NASDAQ ($NQ) Daily
Today, NQ rejected the 21dma again and made a lower high to finally close right above the 10dma. This was exactly the scenario I didn’t want to see last night as I pointed it could be a possible rollover scenario. We are still above June’s low of 11068$.
Tomorrow, I want to see the 11068$ level & UTL hold, otherwise, it would confirm the rollover scenario. If we do roll over, I would look for potential support around the 10845/10890$ area (Oct. 3 low). On the upside, a bounce here and reclaim of the 11285$ & 21dma would be an ideal bullish scenario.
$NQ levels on the upside (resistance)
11253$ level (recent swing low)
11285$ level
11534$ level (Sept. structure)
the 21dma
$NQ levels on the downside (support)
11068$ level (3 Oct. low)
10845/10890$ area (2020 structure / June low)
10656$ level (2020 structure)
10484$ (Oct 13th low)
S&P500 ($ES) Daily
$ES levels on the upside (resistance)
3735/3780$ area
the 50dma
$ES levels on the downside (support)
3639$ last week swing low pivot
3596$ level (2020 structure)
3509$ level (2020 structure)
3388$ level (2020 structure)
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MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - Starting to downtrend again @ -277.
20dma @ -457 (⬆️)
NYAD (Net Adv/Decl) - Negative reading today, but still below the last lows… Trend turning down, so tomorrow will be very telling here.
20dma @ -408 (⬇️)
MCOSINYA (McClellan Oscillator) - McClellan is still positive @ 35, but came down from yesterday's thrust @ 35.
20dma @ -124 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - LT breadth pullback, but found support at the 10dma & close at the 25.05 pivot and just above the 50dma.
MMFI (Stocks > 50dma - MT breadth) - MT breadth followed through on the 50dma rejection from yesterday. We seem to have found support at the 21dma and the recent DTL, but tomorrow will be very telling to see if we follow through lower or not.
MMTW (Stocks > 20dma - ST breadth) - ST breadth confirms the reversal and had a rough day, closing just above the 5dma. Still in an uptrend and above all kma’s.
VIX (Volatility S&P 500)- VIX is still putting diverging action in here… We tried to spike again above the 5/10dma, but got rejected again for the 2nd time and closed below the UTL. The VIX seems to not confirm a move lower here…but this is the only divergence I see tonight.
DXY (US $) - a BIG spike in the US$ from the 21dma. Knowing the correlation (inverse) lately, this is clearly putting a lot of weight on the equity market right now and probably the reason why we closed red today.
US10Y/TNX (US 10Y bond yield) - Ok, not the yields starting to move out of the base…we could see that move up in the next few days/weeks. We’ll have to see how the market will react, but if we follow through here tomorrow, this is certainly not good news.
IEI/HYG (Credit Spread) - follow through from the bounce, but still below all kma’s…so no red flag here right now.
BTC/USD (Bitcoin) - Bitcoin followed through on the 21dma reversal and closed below all kma’s and below the recent consolidation UTL. I think the move is down from here, but we’ll have to confirm it tomorrow.
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Access to the PT_database 👇
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Sectors Relative Strength - Weekly (RS vs SPY)
Top 3: FDN - CIBR - IGV
(XLE) Energy - The energy sector confirmed the breakout I expected last night and I think we will see more upside in this sector as the Crude Oil commodity just made a possible inverted H&S setup today. I am playing that sector via GUSH & DINO.
(XLV) Health Care - XLV Was not able to hold the 50dma, but still got supported in the stage 3 base area. Not the best action, but could be the retest of the DTL & support to form a WBPB setup.
(PEJ) Leisure & Ent. - Confirmed the 50dma rejection today, but not very powerful. We are still above the 5/10/21dma and above the DTL as well. So this is constructive action, but need more confirmation on where we will find support.
(XLF) Financials - Confirmed the 50dma rejection today, but not very powerful. We are still above the 5/10/21dma and above the DTL as well. So this is constructive action, but need more confirmation on where we will find support.
(FDN) Internet - One of the strongest sectors in the last 5D that builds a nice action around the recent DTL & 21dma. We are really at a tipping point, do we breakout that DTL & 21dma, or we rollover and head lower from here…tomorrow will tell.
(XBI) Biotech - XBI is losing it as we confirmed the 50dma rejection on strength & volume today. Really not a good look as we’re back in stage 1 base.
Alex’s TAKEAWAYS
I really don’t like the 21dma rejection on $NQ today and I positioned on the short side today to catch the rollover scenario in case this materializes tomorrow. The US $, the bond market, and now the Crude Oil joining the party could really make a dangerous environment for the stock market. So overall, I advise high cautious right now guys…play defense and wait that the internals cools down and the indices show reversal before getting engaged.
That being said, the energy sector (XLE) is worth playing as this has shown this year that it can buck the trend even in a downtrend. That strength and breakout today on XLE along with the individual stocks are very constructive.
Gameplan:
I want to first see if I can get a cushion on my current positions as I am above my allowed progressive exposure tonight (30 vs 25%). If we really gain traction on XLE & the market is selling off, then I might add more SQQQ to play that rollover.
If we reverse higher, then I will close my SQQQ trade above 11285$ and might initiate a TQQQ position along an individual setup, but no more than that.
LEADERS LIST
Overall leaders (PRIME Score)
WTI,HLIT,PBF,PR,DEN,CVI,YPF,MUR,DO,WFRD,VAL,LBRT,NOG,DINO,MTDR,MRO,DVN,FANG,TALO,SLB,
Fundamental leaders (FA Score)
AMR,HCC,DK,MRO,ERF,DVAX,MGM,DRH,TELL,LBRT,BHF,ENLC,SWAV,TRGP,WTI,HLIT,MPC,FANG,KOS,ARCH,
Technical leaders (TA Score)
WTI,PBF,NTNX,APDN,PR,DO,DEN,MUR,HLIT,CVI,WFRD,YPF,SLB,VAL,ZETA,NOG,PAYO,MTDR,TNK,NOV,
Relative Strength 1 Month (1M-RS)
APDN,PR,PUMP,PBF,NEX,CVI,EGY,WTI,LBRT,CAR,MTDR,PARR,NOV,TLRY,AGEN,PAYO,NOG,SLB,CPE,DO,
Relative Strength 3 Month (3M-RS)
APDN,YPF,WFRD,INSW,WTI,NTNX,TNK,AEHR,DEN,PBF,RVNC,HLIT,DO,MUR,PR,AZUL,RXDX,XMTR,CVI,ZETA,
Relative Strength 6 Month (6M-RS)
APDN,YPF,INSW,WFRD,TNK,WTI,AEHR,NTNX,PBF,DEN,HLIT,RVNC,DO,MUR,RXDX,PR,CVI,STNG,XMTR,EURN,
PT PORTFOLIO UPDATE
Today was pretty calm outside of the 3 positions that I took and kept EOD as we closed above the entry pivot.
LONG FOCUSLIST 📈
MRO 28.63+28.91, FOUR DTL+48.40,
MRO 🎖️
I think the leading names in the oil sector moved today, but sometimes other strong names will move 1-2 days after the whole sector. One of those could be MRO as this is building a nice little consolidation & retest of the base area.
Entry: recent breakout high pivot @ 28.63$ + 28.91$
FOUR
One of the very few names looking good right now is FOUR. I like the first leg up we had and now consolidating in a clear wedge pattern with all kma’s squeezing together. (launch pad those lions call it ;)). I would play that DTL or previous swing high pivot.
Entry: recent swing high pivot @ 48.40$ + DTL
SHORT FOCUSLIST 📉🆕
PVH 46.48+DTL, PAGS UTL, VLD 3.55, HUN 25.56,
PVH
40% leg down, followed by a pullback to the 21dma, and now sitting at the UTL that would confirm the setup.
Entry: recent swing low pivot @ 33.20$
PAGS
Lower probability setup IMO as we are just chopping around, but I think that ST UTL could come into play for a short entry from the kma’s squeeze.
Entry: recent swing low pivot @ UTL$
VLD 🎖️
A name that was very strong recently, but just broke the base it has formed and retested that area along the 50dma this week. I see a retest & rejection (BORS) that would be confirmed with today’s low pivot as we did break that UTL.
Entry: recent swing low pivot @ 3.55$
HUN
A clear downtrend for many months and now 36% from the highs. We just had a pretty good bounce at the 50dma, with a failed breakout on the recent swing high. We also made a lower high & rejection today on the reclaim attempt. That’s short to me.
Entry: recent swing low pivot @ 25.56$
INDICES trades (SQQQ/TQQQ)
That’s the kind of trade that is hard to plan & explain in advance. I share indices intraday setups & trades each day in the Discord channel if you’re interested to join. (7 days free trial, then 20$/m)
🎖️ = Alex’s highest conviction setups
NOTE: I have the discipline to build a detailed FocusList each night, but I want to emphasize that I DON’T take all the trades that would trigger their entry. Some reasons to take a specific position over another, or not take any trade even if the alert is activated, are:
The general market price action
My Market-Based exposure model
My Portfolio-based exposure model (progressive exposure)
A high-conviction setup
Price action around the entry pivot
Then even if I take a trade at the entry pivot, I will very often sell it right away if the market roll over or the stock is backing out of the gate. I prefer to re-enter on the entry pivot reclaim than to be stuck with a larger loss. Please study closely all my education articles to learn how I handle trades around these entry pivots.
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REFERENCES
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