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)
Economic Calendar
Sectors Review
Alex’s TAKEAWAYS (+Gameplan)
Leaders list
Alex’s Portfolio update
LONG Focuslist
SHORT Focuslist
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Alex ✌️🛡️
GENERAL MARKET ANALYSIS ($NQ/$ES levels)
NASDAQ ($NQ) Daily
Today, we opened very strong on the futures, tested the 11534$ level, and then pulled back pretty quickly down to retest the 11253$ level & 10dma. We found a bid down there and managed to close the day above the 5/10 & 21dma and just below the 11534$ level. This is a very good follow-through action, with a retest of the lows that show us that buyers are defending that level. This is a very positive action we saw today IMO.
Tomorrow, I want to see NQ stays above the 21dma again and ideally breakout of the 11534$ level and ideally get close to the 50dma & 11689$ level which would be a 1.9% move from here.
$NQ levels on the upside (resistance)
11534$ level (Sept. structure)
11689/11794$ area (May/June/July structure)
the 50dma (!!)
$NQ levels on the downside (support)
11253$ level (recent swing low)
11068$ level (3 Oct. low)
10845/10890$ area (2020 structure / June low)
S&P500 ($ES) Daily
$ES levels on the upside (resistance)
3855/3903$ area (May/June/July structure)
the 50dma
$ES levels on the downside (support)
3780$/3735$ area
3639$ last week swing low pivot
3596$ level (2020 structure)
3509$ level (2020 structure)
3388$ level (2020 structure)
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - We are still negative, but we saw an improvement today @ -267 NNL. The trend is still up and we’re going in the right direction.
20dma @ -371 (⬆️)
NYAD (Net Adv/Decl) - Another pretty weak day here with only 488 advances today, weaker than yesterday, but the trend is still going higher… so we’re going in the right direction. If the 20dma goes positive tomorrow, this is VERY constructive.
20dma @ -43 (⬆️)
MCOSINYA (McClellan Oscillator) - McClellan improved today @ 103.
20dma @ -60 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - LT breadth with a small advance, but still broke structure today and close above the 26.87% pivot, so we just made a new high.
MMFI (Stocks > 50dma - MT breadth) - MT breadth with a small advance, but another structure break here with a close above the 32.03$ recent swing pivot and the 50dma. Very positive action & follow through on the channel DTL breakout.
MMTW (Stocks > 20dma - ST breadth) - ST breadth with a small gain, above all kma’s.
VIX (Volatility S&P 500)- Gap up into the 10dma and above 30$, to finally almost close flat below 30 & all kma's. This is also the first kma's retest & rejection right after the multi-month UTL break last week. (WBPB setup)
DXY (US $) - US$ was not able to reclaim the 21dma today and we just gapped down below the multi-month UTL…if we really break lower here, this is really “show time” for the equity market IMO.
US10Y/TNX (US 10Y bond yield) - The 10Y continued to trend higher in an almost climatic type of move today after a bounce off the 5dma. We’ll have to monitor this very closely as this can have a big impact on the market.
IEI/HYG (Credit Spread) - Tried to bounce but got quickly rejected at the 5dma. Good down trending action.
BTC/USD (Bitcoin) - Bitcoin came back down to retest the DTL today and got supported. We’ll have to breakout of that 50dma & support area to really confirm the upside move.
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Sectors Relative Strength - Weekly (RS vs SPY)
Top 3: XLE- SMH - XME
(XLE) Energy - The energy sector continues to trend higher above all kma’s. At this point, I would not be very surprised if we come down a bit to retest the recent base area & 85.18$ pivot in the next few days.
(XME) Metals & Mining - XME came down today and got supported at the 5dma and finally closed above the base area, but still red. Not bad action as we confirmed that we were supported lower.
(XBI) Biotech - XBI tried to break lower again, but found some bit at the 77.65$ pivot again and closed at the 10dma and just below the DTL. Tomorrow will be VERY pivotal for this one as we cannot get more squeezed than that between the UTL/DTL.
(SMH) Semiconductors - Good follow-through today as we closed green and almost above the 21dma. We are now in that support area and it will be interesting to see if we can reclaim the 189.94$ base top level tomorrow.
(XLF) Financials - Tried to breakout off that recent swing high pivot, but was not able to close above it. Will it be tomorrow?
(FDN) Internet - Retest of the DTL and closed green…positive action here and I expect follow-through tomorrow.
(IGV) Software - Retest of the DTL and closed green…positive action here and I expect follow-through tomorrow.
Alex’s TAKEAWAYS
We just had a pretty constructive action on the indices, as we followed-through on Friday’s action and close again above the 21dma. I still see the breadth & internals being weak…but grinding & trending higher, so this might be the way this market will fool everybody into thinking that this rally won’t work. We’ll get into the 50dma on ES tomorrow and maybe on NQ as well, so this will be a BIG test and we’ll see if this really is real and has legs or if sellers will step in once again.
I don’t see a lot of potential setups tonight, so this might be a sign that we need more time to really build nice bases in strong stocks.
Gameplan:
I did build my 20% exposure today in 4 names, so I don’t plan to be really aggressive tomorrow as I am now at my maximum allowed exposure based on my Model. This will be a day to manage these positions and see if they can follow through and give me some cushion to weather the next PB.
LEADERS LIST
Overall leaders (PRIME Score)
WTI,HLIT,PBF,CVI,YPF,PR,AEHR,DEN,CCRN,MUR,DINO,DO,ERF,NOG,DVN,MPC,PARR,FANG,MRO,XPRO,
Fundamental leaders (FA Score)
RES,AMR,HCC,MRO,ERF,DVAX,MGM,DRH,TELL,BHF,ENLC,SWAV,TRGP,WTI,HLIT,DK,MPC,FANG,KOS,ARCH,
Technical leaders (TA Score)
AEHR,WTI,PBF,HLIT,PARR,CVI,CCRN,YPF,MUR,SLB,DO,XPRO,PR,DEN,NTNX,WFRD,DINO,CPRX,NOV,APDN,
Relative Strength 1 Month (1M-RS)
NEX,CVI,PBF,PARR,PUMP,XPRO,AEHR,MARA,PR,MUR,RES,LBRT,CCRN,NOG,DO,AMR,CAR,SVC,SLB,ESTE,
Relative Strength 3 Month (3M-RS)
APDN,YPF,AEHR,WFRD,INSW,NTNX,WTI,XPRO,TNK,DEN,XMTR,DO,PR,MUR,HLIT,PARR,PBF,AZUL,SLB,RCL,
Relative Strength 6 Month (6M-RS)
AEHR,STNG,TNK,INSW,ARRY,YPF,CVI,CCRN,TH,SWIR,RXDX,STKL,HLIT,MRSN,WTI,PBF,CPRX,ELF,PAYO,RXRX,
PT PORTFOLIO UPDATE
Intraday/Closed trades:
LONG FOCUSLIST 📈
SWAV 284.41, ELF 41.91, STKL 10.11,
SWAV 🎖️
This one doesn’t need a presentation… been a regular in here. We are still building very tight action in that base area and just below the DTL. We will break one side or the other…I would use the recent swing high or DTL for an entry here as well.
UPDATE: PB to the 50dma today, but managed to close green and above the base area. I will use the higher pivot for an entry, along the DTL if we open below it.
Entry: recent swing high pivot @ 284.41$ + DTL
ELF
ELF tried to breakout last week, before going back in the base and finding support at the 10dma. We reclaimed that base area Friday, which I consider to be a BORS setup that we could confirm with the initial breakout swing high pivot. I also like the volume profile of the past few days, clearly, accumulation is going on.
UPDATE: Nice PB and support at the 10dma & base area today. We closed green here as well and just below the entry pivot.
Entry: initial breakout swing high pivot @ 41.91$
STKL 🎖️
Another name that I follow for quite some time, but now I really like the tight consolidation we are building right now at the kma’s. I see higher lows and now a nice 50dma rejection/bounce Friday. I would use the first breakout high as an entry pivot.
UPDATE: acted really well today and I was very closed to taking that trade, but finally never triggered the entry pivot.
Entry: breakout high pivot @ 26.40$
SHORT FOCUSLIST 📉
FLYW
After the Sept. 16th break & gap down, we have never really been able to resume the uptrend and have been building LH & LL since then. I like how we broke that recent low structure 2 weeks ago and came drifting up to retest that level & been rejected at the 21dma. I will look at the recent UTL & swing low for a short entry.
Entry: recent swing low pivot @ 20.29$ + UTL
🎖️ = 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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Hi Alex, great newsletter! Question, what do you have your settings on your KMA’s for “source”, is it “open” “high” “low” or “close”? Or something else? Bc I have different locations for my KMA’s but they’re set for the same timeframes as you. Thx