Good evening folks! 👋
What we’ll cover in the Newsletter tonight:
General market Review that includes my Bullish & Bearish scenarios
Market Breadth & Internals
Economic Calendar
Sectors Review
Leaders list
Alex’s Portfolio update
Focuslist including setups, alert levels & explanation
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MARKET REVIEW
Russel 2K ($RTY) Daily:
Today marked the highest volume since the current cycle low on June 16th. Something is definitely brewing before the highly expected CPI economic release tomorrow morning (8:30 EST).
We jumped 1.25% higher right into that 1905$ level I was talking about last night. The market is now at a pretty important resistance area, right before a key economic release... It’s either that we break that area higher tomorrow, or we roll over and undercut the 50dma again.
So, now it’s just about that CPI reaction tomorrow morning. If the market can breakout of that 1905$, I’ll be looking to add more exposure. If we rollover at these levels, I’ll be on the defensive again.
What are the levels I’m watching on RUSSEL ($RTY) tomorrow?
On the upside (bullish scenario)
IF - Already in the bullish scenario - If we breakout of the 1905$ level, then reinforce the current scenario.
THEN - Continue Increasing the exposure with respect to my Market & Portfolio exposure model
On the downside (bearish scenario)
IF - A close below 1800$ area (LOWER LOW)
IF - A high volume & range rejection of the 1905/1960$ area could be a bearish red flag for me.
THEN - Reduce exposure & potentially back to cash
MARKET BREADTH & INTERNALS
NYHL (New 52W Highs - Lows) - NNH got positive again @ +5 which is very constructive, but we’ll have to accelerate on the upside if we want to get a real sustained move up.
NYAD (Net Adv/Decl) - Net advances came down a bit @ +1659. Still pretty high.
MMFI (Stocks > 50dma) - Another big move here as we gapped up above all kma’s and approached a first potential resistance area with that last rally pivot.
MMTW (Stocks > 20dma) - Another big move today (+33%) right above the 50dma. That begins to be a big move from the lows with 4 consecutive days. We could see some consolidation or light pullback and that would only be healthy IMO. But still room to run before being overbought.
MCOSINYA (McClellan Oscillator) - McClellan with the first positive reading for a while @ 66.88.
VIX - VIX with a very noticeable divergence today as it was up more than 6% at some point while the market was up 1%. We’ll get more information tomorrow, but the good thing is we’re still below the 24.33 pivot and below all kma’s.
PCCE (PUT/CALL EQUITY RATIO) - 0.87
DXY (US $) - US$ continued on Friday’s weakness and closed below the 21dma and is now right at 108.07$ important pivot on the futures.
US10Y (US 10Y bond yield) - 10Y is still very strong with yet another 10dma & UTL bounce today. That channel is strong.
IEI/HYG (Credit Spread) - Credit Spread continues to drift lower and did not anticipate anything in front of CPI. We just made a new lower low today.
BTC/USD (Bitcoin) - Bitcoin broke out of the 22340$ base level today and stays above the 50dma and all kma’s. The important level to reclaim and now we’ll have to see if we can hold it on the after-hours retest.
CL_F (Crude Oil) - Reclaim of the recent swing low pivot, but seems to get some resistance at the 21dma. We’ll have to see if we rollover here or reclaim it.
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Leading sectors (weekly top 5):
(TAN) Solar - Leading sector. We’re at the top of the wedge, right at the DTL. For me, this is a very constructive action I see as we were not able to reject that level and we quickly found support at the 5dma and closed in the upper range of the day and above Thursday's close.
UPDATE: we tried to come back in today, but got supported again at the 5dma. This count as a successful DTL retest for me.
(PBW) Clean Energy - Also a retest of the DTL and closed green. Very positive action confirming the DTL breakout on high volume.
(CIBR) Cybersecurity - Reclaim of the stage 1 base area today and confirming the UTL reclaim as well.
(XME) Metals & Mining - Gapped up but found resistance and closed unchanged on good volume. Might need some time to settle.
(FDN) Internet - Reclaim of stage 1 base area on high volume and back above all kma’s.
On watch sectors (weekly top 5-10):
(XLY) Consumer Disc. - Found resistance at the recent swing high pivot today. Might need a couple of days to consolidate and let MA’s catch up a bit.
(IGV) Software - Bounced from the UTL and now right into stage 1 base area but back above the 50dma. Still need a lot of work to breakout & reclaim that resistance area.
(GDX) Gold miners - Clear stage 4 downtrend, but we begin to see some constructive action as we reclaim the support area and kind of breaking out of the DTL from recent highs. We confirmed the DTL breakout today by following through on yesterday’s move.
(XRT) Retail - Reclaimed the UTL and is now right at stage 1 base area top level. We are now back above all kma’s
(XBI) Biotech - Successful DTL breakout Friday and back above all kma’s after retesting the stage 1 base breakout. We even retested the 5dma today and got supported by it. Very constructive action.
Alex’s TAKEAWAYS:
I STILL see positive signs as the indices continue to climb higher and breadth to be very strong off that low. That being said, tomorrow CPI data will really decide the faith of this current rally IMO.
We’ll either roll over and then we’ll see what this market is made of (is the pullback healthy or not), or we simply shoot higher and don’t look back. I want to see tomorrow's action before making up my mind on that current market.
I want to see that first pullback reaction before increasing my exposure. Will the pullback be on low volume, orderly or not, on large daily price ranges, and will it hold key moving averages on the retest? It’s all little things I’ll be looking closely to build my confidence or not in this current market rally.
DEFENSE, BUT STAY POSITIVE & OPEN🛡️
LEADERS LIST
Overall leaders (PRIME Score)
STEM,CPRX,INSW,CELH,RXRX,BFLY,XMTR,BBIO,TH,YPF,EURN,PRVA,ENPH,CCRN,DHT,PRTY,HIMS,LNTH,CALM,NAT,
Fundamental leaders (FA Score)
RES,AMR,HCC,DK,MRO,ERF,DVAX,MGM,DRH,TELL,LBRT,BHF,ENLC,SWAV,LC,TRGP,SLDP,WTI,MPC,FANG,
Technical leaders (TA Score)
RVNC,RXRX,CPRX,STEM,DCPH,BFLY,XMTR,YPF,PRTY,NAT,ENPH,RXDX,PRVA,HIMS,BBIO,DHT,EURN,INSW,CELH,MARA,
Relative Strength 1 Month (1M-RS)
AVYA,PRTY,BHC,RVNC,YPF,NTNX,PRCT,TASK,AMRS,RXRX,TELL,XMTR,NU,NAT,WFRD,CCRN,COIN,LULU,GSL,DV,
Relative Strength 3 Month (3M-RS)
APDN,MRSN,RVNC,RXDX,CPRX,PRTY,TH,RXRX,STEM,BFLY,MARA,PLUG,AGEN,AMRS,BBIO,XMTR,BEAM,HIMS,AEHR,CELH,
Relative Strength 6 Month (6M-RS)
TH,CELH,DCPH,STNG,CPRX,MRSN,STEM,RXRX,STKL,RVNC,PDD,SIGA,ARRY,CEIX,PRCT,INSW,SWAV,NFE,ENPH,HRB,
PT PORTFOLIO UPDATE
Recent operations:
I tried getting in BFLY again today but did not work out as my LOD SL got hit.
Sold the 2 positions I got the less cushion in order to reduce my exposure into CPI tomorrow. TH & INDI
Position management GAMEPLAN:
Maximum new exposure: 86% (based on Portfolio & Market exposure model)
Position size: 1/2 positions max (10% of equity)
Position management
First trim: sell 25% initial position
Trim @ first day EOD
SL moved @ breakeven
2nd trim: sell 25% initial position - 10dma EOD break
3rd trim: sell 50% initial position - 21dma EOD break
Scale-out approach
Alex’s FOCUSLIST
PDD 0.00%↑ 🎖️
We just had a 55% move from the lows that led to a stage 1 base breakout. We just had a nice consolidation on low volume last week and also a retest of the base area. This is a classic BORS setup at a very important LT base breakout area. I’ll use the recent swing high pivot for an entry.
UPDATE: super positive action today as we found support at the 5dma, creating a higher low just below the recent swing high pivot.
Alert - 72.19$
Ok, we were due for a more speculative name to play for a short swing. 100% move following ER and pulled back pretty quickly to the 50dma. Since then, I like the way it flags right above all kma’s and building higher lows on low volume. Higher risk, but could move fast for a quick swing.
UPDATE: Broke out of the entry pivot today again, but closed very weakly. I will be looking at the 6.69$ again for an entry.
Alert - 6.69$
Still in is stage 1 base breakout area as we did not move above the end of May high, but I really like the recent action. We had a nice 17% PEG followed by 4 weeks of very tight action until we bounced a second time from the 21dma and broke above the area. We then retested that level Thursday and Friday an inside day still above the level. We might need a couple of days of consolidation again or simply could push higher quickly from here. I would use May high pivot (16.35$) and also the recent swing high for an entry.
Alert - 16.35$ + 16.63$
A semi-name with a stage 1 base breakout following earnings. Considering the sector weakness it’s a clear RS sign IMO. There is also a big accumulation that took place in that base recently. (high buying volume) I would play today’s high pivot as an entry to play the breakout itself.
UPDATE: Got to sell my position to reduce my exposure EOD. I see no red flag as we’re surfing that 5dma above important levels. If CPI is good tomorrow, I’ll consider this name again tomorrow.
Alert - 8.92$
A recent semiconductor leading name that pulled back to the 50dma in the recent market PB. We broke from the mini-channel today. The 71.98$ is an important level to break to continue higher, so it’s a good pivot to use for an entry.
UPDATE: Did not breakout today, but still strong action above the 5dma. I’ll use yesterday’s high as an entry pivot.
Alert - 72.92$
26% recent run-up that led to a long stage 1 base area retest. We found support at that area and the 50dma before breaking out of the DTL today. I’ll use the recent swing high for an entry.
Alert - 31.16$
40% leg that led to a pullback between the 21 and 50dma. We reclaim that top base area and just retested it and the 5dma today. Recent swing high pivot to confirm the BORS setup.
Alert - 86.85$
Outside of ENPH, I really like this RUN solar name. As you know this is a leading sector and I might be looking to add a second name to this sector. RUN with a very clean BORS setup today on that base top & 5dma retest.
Alert - 39.07$
BEAM 0.00%↑ 🎖️
Biotech name that I tried to position earlier but it failed the 21dma flag. It is now consolidating for a few weeks and found support a little bit below the 50dma and building higher lows. kma’s are super tight and squeezed. I will be looking at either the DTL from that first 150% leg up high or the 58.38$ recent swing. With the XBI sector strong, that will be one of my top focuses tomorrow.
Alert - 58.38$ + DTL
STEM 0.00%↑ 🎖️
A name that I currently have a position from lower in the base, but I will be looking to add to my position if we can reclaim that 16.98$ top base level. This is the strongest stock of all my UniverseList and I want it to be sized properly. Size matter!
Alert - 16.98$
🎖️ = 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.
REFERENCES
Articles on the system:
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