Alex's daily Market update & Focuslist - 01/12
Great market reaction to CPI report and breadth continues to improve!
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Price Action Analysis:
Today was a BIG day! it was CPI day.
All the clues pointed in that direction, and that’s what we got. The market was very volatile around the CPI news & market opening, but we managed to hold critical levels such as the 3964$ pivot & Friday’s high as well.
For me, the win was for the market to NOT roll over today and see underneath strong breadth again. RTY_F (+1.65%) is now clearly leading ES_F & NQ_F indices, so I’ll keep a closer eye on the small caps in the future.
Overall, solid reaction on CPI today.
On the upside,
4016$ & 4050$ are the two levels I’ll be looking closely at on the upside. We also have the very important 200dma that will be around 4025$ tomorrow, so one to watch as well.
On the downside,
I want to see the 3964$ level to hold now on a retest. The 50dma is also a significant level to watch on the downside.
NASDAQ (NQ_F) Daily
RUSSELL 2K (RTY_F) Daily
In the following sections of tonight’s letter, I’ll cover essential parts of my daily routine & preparation for tomorrow’s trading session.
✅ My overall current market Takeaways & GAMEPLAN for tomorrow
✅ My daily Focuslist, including setups, alert levels & explanation (LONG/SHORT)
✅ My Portfolio update
✅ Sectors Review
✅ Market Breadth & Internals
✅ Economic Calendar
✅ Prime Model spreadsheet (PT_database)
✅ Leaders list (technicals, fundamentals & potential TMLs)
Alex’s TAKEAWAYS
Before this day,
We were at an inflection point (key levels)
Breadth was improving for more than a week and was at the highest level of this bear market.
We were waiting for the CPI report that, in recent history, has had a BIG impact on the market.
Today,
We did react positively to the CPI report
Breadth CONTINUED to improve
Essential internals (VIX/DXY/10Y) are at key levels from this bear market history.
BUT, short-term breadth seems to be pretty extended & overbought (see Gameplan)
Yes, I think we’ll continue higher from here in the short/medium term, as we have recently seen important and key indicators flashing bullish reversals. Today’s CPI reaction only strengthens that view for me.
The thing is, I don’t know how far or how long we’ll go…and we don’t need to know either! We’ll play the cards we’re handed and play this trend until the signs reverse and we change our view.
Market health & Trend indicators:
LT_SIGNAL: uptrend (black) + BELOW 50dma = BEAR market under pressure (🟨)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = UPTREND (🟩)
Tomorrow's economic news:
GAME PLAN:
As I increased considerably my exposure today, along with the fact that:
I don’t see a lot of fresh good & new long setups tonight.
Many recent strong stocks are very extended and would need some healthy consolidation.
Some important sectors are getting into overhead resistance (SMH, TAN, XLE, etc)
We are seeing short-term breadth being pretty overbought (stock >20d, McClellan)
Because of that, I plan to be pretty easy on adding new exposure tomorrow and will look to trim some exposure as/if we reach critical levels on ES_F tomorrow. I’m more in managing my exposure right now.
EXPOSURE MODEL:
FOCUSLIST (LONG)
AG 9.05, YY 37.52,
AG - Alert: 9.05, SL: 8.64
AG is back on my FL as SLV (silver) is still building very nicely at the 21dma. AG is still holding the stage 1 base area and is supported each time we test it. I am still looking at the same pivot for an entry.
YY - Alert: 37.52, SL: 35.68
Stage 1 base breakout last week, then we are pulling back on very low volume to the 10dma. This is the first pullback of stage 2 and potentially a great area to position on a lower-risk entry.
UPDATE: It could not bounce from the 10dma on the first attempt. Keeping it on my FL for tomorrow.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
SECTORS PERFORMANCE
Leading sectors:
(XBI) Biotech - THERE WE GO! We are outside the 3M+ consolidation as we breakout above the 85$ pivot today. I am long LABU and a sector that might have legs from here.
(GDX) Gold miners - The trend continues
(XLE) Energy -50dma breakout… this is good, but we are getting back into prior resistance. Can we breakout here now?
(XME) Metals & Mining - Solid action as we break to NEW HIGH. Leading sector?
(XLV) Healthcare - The consolidation below the 50dma continues. We made a higher low today, and we might try the DTL breakout tomorrow. Stay tuned.
Sectors on watch:
(SMH) Semiconductors - 224.65$ pivot breakout. Now, if we can breakout 230$, we will be at a new recent high.
(TAN) Solar - Following through, but getting into resistance tomorrow.
MARKET BREADTH & INTERNALS
$NYHL (Cumulative new 52W Highs/Lows & 50dma)
Still on bear market signal…BUT still UP. We are at the closest 50dma cross of this entire bear market. This cross has been pretty reliable in the past 20 years to signal a market turn. Keeping a close watch on this one in the next few days!
LT_SIGNAL: uptrend (black) + BELOW 50dma = BEAR market under pressure (🟨)
!MCSUMNYA (McClellan summation index & 10dma)
MT_SIGNAL: uptrend (black) + ABOVE 10dma = UPTREND (🟩)
$NYMOT (McClellan Oscillator - Breadth extensions)
NYHL (New 52W Highs/Lows) - New BEAR MARKET high @ 96 today
NYAD (Net Adv/Decl) - Net advances for the 5th consecutive day today. Longest of this Bear Market.
MMFI (Stocks > 50dma - MT breadth) - We are getting into overbought territory.
MMTW (Stocks > 20dma - ST breadth) - We are the most overbought we’ve been since Feb. 2021.
VIX (Volatility S&P 500) - If the $VIX gets below 18.67$ tomorrow, which is essentially the bear market floor... I will be very bullish (even more) on the potential of this rally.
DXY/TNX (US$) - Breaking down lower again today with a 1% move. I am watching the 100$ area for the next potential support.
US10Y/TNX (US 10Y bond yield) - Tomorrow could be a BIG breakdown for the 10Y yields… watching the 3.40% level very closely.
ECONOMIC & EARNINGS CALENDAR
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
AEHR,NINE,CPRX,RIG,OII,TGTX,RCL,FOUR,UAL,FTAI,CPRI,YY,CSIQ,ARRY,SHLS,VAL,COTY,WMG,ALGM,FRO,
Fundamental leaders (FA Score)
KOS,NOG,FRO,CALM,PR,CPE,RUN,AEHR,HGV,TRIP,GFS,JXN,LBRT,DVAX,CEIX,DK,PBF,ALB,LYV,EURN,
Technical leaders (TA Score)
NINE,TGTX,RIG,AEHR,OII,CPRX,CSIQ,RCL,UAL,CPRI,FTAI,ARRY,CLF,KLAC,FOUR,BAND,YY,ALGM,COTY,CCL,
Relative Strength 1 Month (1M-RS)
AUPH,RIOT,TGTX,NINE,CLF,BTTR,RIG,FTAI,CSIQ,CARG,AAL,UAL,AEHR,DAL,CCL,HLIT,MELI,CPRX,BLMN,SPR,
Relative Strength 3 Month (3M-RS)
NINE,TGTX,BAND,OII,RIG,AEHR,CPRX,ALGM,CPRI,KLAC,SPR,SMCI,WMG,UAL,CCL,COTY,FTAI,ARRY,CSIQ,RCL,
Relative Strength 6 Month (6M-RS)
NINE,AEHR,TGTX,CPRX,OII,RIG,BAND,ARRY,SMCI,RCL,ALGM,FOUR,CPRI,VAL,SHLS,GPS,CSIQ,PRTA,FRO,ELF,
REFERENCES
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