WHAT-A-DAY….!
This was one hell of a reversal and rally on softer than expected CPI release this morning, now let’s get ready for tomorrow!
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Alex ✌️
GENERAL MARKET ANALYSIS
S&P500 (ES_F) Daily
Today, we rallied straight up on softer CPI data release, and this move carried on all day long on volume. I guess there was a lot of short covering today as this was a big expectation breaker like the important short positioning was showing. I’ll talk more about it later, but it will be really important to take it day by day and see if we can get follow-through on that move or it was simply a major short covering one-day rally. As of price action, we closed above 3903$ level and all recent structures.
Since the Oct. 13th low, we now have a HIGHER LOW (HL) and now a new HIGHER HIGH (HH), confirming a new uptrend based on market structure.
Tomorrow, Tomorrow, we’ll have to watch for a couple of scenarios.
Gap up above 3977 or 4016 that we will have to watch for the area retest
An open between 3903$ and 3977$ - If so, we want to see a reclaim of 3977$ or a retest & bounce at the 3903$ level.
In all scenarios, we want to see 3903$ hold and 3977$ or even better 4016$ breakout for a bullish scenario
NASDAQ (NQ_F) Daily
RUSSELL 2K (RTY_F) Daily
In the following sections of tonight’s letter, I’ll cover very important parts of my daily routine & preparation for tomorrow’s trading session.
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Alex’s TAKEAWAYS
Today’s CPI report clearly caught many investors/institutions by surprise and that’s why many were probably forced to cover their short positions, fueling even further this rally. Nonetheless, we have now a clear price structure change confirming the up trend and potential rally going into year-end.
We cannot know for sure if we’ll follow through on this move but by the strength of the move, the new structure uptrend, the IMPRESSIVE breadth thrust, and the internals shift, we have no choice but to test the waters and get engaged step by step by using progressive exposure.
We’ll let the market pull us in.
Gameplan:
Tomorrow, I plan to open between 10-20% more long exposure if the market is holding and see If I can push and be a bit more aggressive intraday. It will be one position at a time and see if they work before opening any more exposure.
But Ideally, I would want to take some profit into strength to keep a reasonable 30-40% exposure into the weekend…no more than that. (it all depends if my positions build a cushion and allow it)
I will also start focusing way more on the individual names than the indices going forward. I will look for extreme breadth readings to take profit into strength and potential resistance areas for red flags & reversals. But I will not follow ES_F intraday and won’t take decisions based on it.
PORTFOLIO UPDATE
INTRADAY/CLOSED TRADES:
LONG FOCUSLIST
LTHM 33.97, ENPH 312.77, ZETA 8.57, RES DTL+10.79, SWAV 277.95, UUUU 7.61, SMCI 82.91, STLD 97.02, PSTG 31.52, HRMY 59.27
LTHM🎖️
Still in its base, but showed incredible RS in the last few months. We are now right below the base top area and I will be looking at a base breakout at the 33.97$ pivot.
ALERT: 33.97$
SETUP: BREAKOUT
ENPH
One of the leading stocks of the past few months, that just retested the 21dma and filled the earnings gap on the last market PB. With today’s action, we reclaimed the base area, and I will be looking at the most recent swing high for an entry.
ALERT: 312.77$
SETUP: BREAKOUT
ZETA🎖️
Was in the FL 2 days ago, and found great support in the 21dma and the support area today. I would be looking at the first reaction swing high pivot for an entry. We’ll want to see volume come in this one.
ALERT: 8.57$
SETUP: BORL
RES🎖️
The highest FA (fundamental) score of my entire Universe List is just setting up at the 21dma after an impressive 85% run from the lows. I would look at the DTL or recent swing high for an entry.
ALERT: 10.79$ + DTL
SETUP: BO21PB
SWAV
Now that everybody got shaken out…let’s look for an entry :) I see a potential shakeout on ER reaction, then today we reclaimed the DTL of the channel and also found resistance in all kma’s. If we can breakout of those kma’s and reclaim the base area 277.95$ level, This could be an ideal entry pivot.
ALERT: 277.95$
SETUP: WBPB
UUUU
Potential wedge break on this uranium stock. Could be a hot sector, so I’m keeping an eye on this setup tomorrow.
ALERT: 7.61$
SETUP: WB
SMCI
One of the most interesting semiconductor stocks right now as it builds a nice consolidation right above the base level following the last PEG.
ALERT: 82.91$
SETUP: BORL
STLD
Strong steel name that just made a higher low at the 21dma today. I will be looking at a reclaim of the last swing high for an entry.
ALERT: 97.02$
SETUP: BO21PB
PSTG
Still a bit of time before ER for a swing on this tech stock. We are building a nice consolidation above the 21dma and right below the base top level. If we break that level, the breakout could be interesting to play.
ALERT: 31.52$
SETUP: BREAKOUT
HRMY 🎖️
One of the strongest IPO out there that still building its consolidation above the base level following the last ER reaction. I will be looking at the same pivot as 2 days ago.
ALERT: 59.27$
SETUP: BORS
🎖️ = Alex’s highest conviction setups
SHORT FOCUSLIST
MARKET BREADTH & INTERNALS (RISK MODEL)
NYHL (New 52W Highs - Lows) - First positive reading for a while!
Trend @ -125 (⬆️)
NYAD (Net Adv/Decl) - We just had the BIGGEST breadth thrust in the last 5Y (and probably more)…meaning a broad market participation today.
20dma @ +336 ⬆️)
MCOSINYA (McClellan Oscillator) - Reclaimed 2d ago reading
20dma @ +138 (⬆️)
MMTH (Stocks > 200dma - LT breadth) - Big thrust today and we’re at the same level as August high, if we can breakout from here tomorrow this would be super positive.
MMFI (Stocks > 50dma - MT breadth) - Big thrust and breakout here today.
MMTW (Stocks > 20dma - ST breadth) - Big reversal and back in the 70%+ area.
VIX (Volatility S&P 500) - VIX crashed on the CPI news today and closed at a new low of 23.50 and below recent structure.
DXY (US $) - MASSIVE drop on the US$ today. -2.3%…this is big and good for the equity market.
US10Y/TNX (US 10Y bond yield) - Also a MASSIVE move in the bond market today with the 10Y losing 6.8%…
IEI/HYG (Credit Spread) - Credit Spread came right back down below Tuesday’s close.
BTC/USD (Bitcoin) - BTC rallied today but still is below the base area and all kma’s.
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
(XLE) Energy - Was not super strong, but still found support again and might build a nice consolidation before breaking out higher. This is healthy action.
(XBI) Biotech - Big expectation breaker and reclaim of the base area and 50dma on volume. The 84.24$ is playable with LABU tomorrow.
(SMH) Semiconductors - Continue to lead in the ST with a big 10% move in volume. We still have some room before going into the resistance area.
(IGV) Software - Good push for the software too today. We closed above the 50dma.
(PBW) Clean Energy - 21dma & recent swing high pivot reclaim. Good action but not that much volume.
(TAN) Solar - Massive 9.25% move today on TAN too as we breakout above the base area and 50dma. This is very constructive action.
PRIME MODEL SPREADSHEET (PT_database)
Access to the PT_database 👇
LEADERS LIST
Overall leaders (PRIME Score)
ASC,INSW,WFRD,RES,DO,PBF,XPRO,ELF,SLB,CHX,APA,EURN,ENLC,MUR,MRO,PDCE,NOV,AEHR,SMCI,FRO,
Fundamental leaders (FA Score)
RES,SIGA,NOG,ASC,DRH,TNK,ESTE,LTHM,CPE,CALM,PDCE,SWAV,RUN,MUR,JXN,TALO,SM,TRIP,ERF,GFS,
Technical leaders (TA Score)
INSW,WFRD,ASC,CHX,SLB,ELF,XPRO,DO,PBF,NOV,APA,RES,NE,MRO,HAL,ENLC,SMCI,PR,FRO,AEHR,
Relative Strength 1 Month (1M-RS)
VCYT,BAND,CHX,ULCC,CAR,ARRY,ASC,WE,CNK,XPO,SMCI,IGT,ALGM,VIR,ELF,CENX,PTEN,NE,WFRD,INSW,
Relative Strength 3 Month (3M-RS)
YPF,WFRD,INSW,SLB,CHX,CCRN,ASC,PR,XPRO,PBF,APA,MRO,ELF,MUR,DO,RES,PUMP,TNK,HAL,ERF,
Relative Strength 6 Month (6M-RS)
INSW,YPF,AEHR,WFRD,ELF,CCRN,ASC,TNK,ARRY,STKL,STNG,CHX,SLB,CPRX,PBF,DHT,PAYO,EURN,XPRO,PR,
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