Good evening folks, here’s another daily Market Update & Focuslist!
General market Review that includes my Bullish & Bearish scenarios
Market Breadth & Internals
Economic Calendar
Sectors Review
Leaders list
My own Portfolio update
My own daily Focuslist including setups, alert levels & explanation
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MARKET REVIEW
Russel 2K (RTY) Daily:
The bullish scenario got trigged today with the market bouncing from the 1800$ area bottom, reclaiming the 1800$ level, and closing above the 5dma. That’s all I wanted to see last night to get engaged again in this market.
Will this bounce will be 1 day, 1week, or 1month…I don’t know! But I have to let me pull back in and we’ll follow price action and watch for any red flag to step back on the sideline again.
We have Jerome Powell speaking at 9:10 tomorrow morning, so this could also be only a one-day bounce as he might have a similar message to Jackson Hole. But that we don’t know either.
We also have to keep in mind that we only closed above the 5dma, we still have a LOT of work to do above with the recent 1846$ area that will act as potential resistance, along with the 10,21 & 50 declining DMA.
What are the levels I’m watching on RUSSEL tomorrow?
On the upside (bullish scenario)
IF - Already in the bearish scenario, but a close above 1846$ and the 21/50dma would increase the constructive action and confirm a more robust bullish 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 and today’s low
THEN - Reduce exposure
MARKET BREADTH & INTERNALS
NYHL (New 52W Highs - Lows) - NNH deccelerated with a close @ -125.
NYAD (Net Adv/Decl) - Net advances today with a 1679 print, which is very positive. Good breadth thrust from the lows.
MMFI (Stocks > 50dma) - Reclaimed Friday’s low pivot and big bounce and closed right at the 5dma.
MMTW (Stocks > 20dma) - That’s the ST breadth thrust I wanted to see from that oversold area. Reclaimed Friday’s low here as well and closed 45% higher and above the 5dma. Seems like a tradable rally signal to me.
MCOSINYA (McClellan Oscillator) - McClellan cooled off and closed @ 192.96 which is going in the right direction…
VIX - VIX with very constructive action today, that’s exactly the move I wanted to see, and not the consolidation box higher… So we broke lower from that recent consolidation in an 8.5% move down. That’s another signal of a potential tradable rally IMO.
CPCS (PUT/CALL EQUITY RATIO) - 0.92
DXY (US $) - US$ was not able to follow through after yesterday’s pivot reclaim. We also closed below the 5dma. Will this be a false breakout? We’ll need more information for that as we’re still above the base breakout area.
US10Y (US 10Y bond yield) - Rejected the top UTL today, but still above all kma’s
IEI/HYG (Credit Spread) - Credit Spread with a pretty big drop today. Closed below all kma’s but still above potential support area. Need more information here as well, but positive.
BTC/USD (Bitcoin) - Bounced from the support area bottom level, but still in yesterday’s range. Need more information here as well.
CL_F (Crude Oil) - Big drop in Oil today on VOLUME. A recession being discounted, or inflation going down faster than we expect…the big question with the Oil price.
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
Leading sectors:
(TAN) Solar - Leading sector. Big bounce from the 50dma on HUGE VOLUME. We broke out of the 2 pivots I was watching lately and now sitting right below the recent consolidation wedge DTL. Price action looking good.
(XBI) Biotech - Biotech with a U&R setup with friday’s low pivot reclaim. I will also be watching that mini-channel DTL breakout tomorrow to confirm the potential reversal.
(PBW) Clean Energy - Good bounce from the 50dma right at the 5/10dma. We are still in that wedge and approaching that DTL for a potential breakout. Still early.
On watch sectors:
(SMH) Semis - Been able to hold Friday’s low and stay above the support area from June/July lows. This is positive ST action, but we are still below the 5dma here…
(XLE) Energy - Energy is really lagging recently with the Crude Oil price weakness.
(IGV) Software - Bounced from that UTL and closed above the 5dma.
(XLF) Financial - Bounced from the stage 1 base area and closed right at the mini-channel DTL. Still below the 50dma.
(FDN) Internet - Reclaim the stage 1 base area bottom level. Still below UTL & 50dma.
(XME) Metals & Mining - Held Friday’s low and bouncing from the stage 1 base breakout area.
(XRT) Retail - Bouncing from Friday’s low and reclaiming UTL. Still below 50dma & recent base resistance area.
Alex’s TAKEAWAYS:
We had an oversold bounce today in the market, but we don’t know how far or serious this reversal will be. Especially with Jerome Powell speaking tomorrow morning.
Many internals were showing pretty extreme oversold conditions and DXY, yields & VIX are showing potential topping action, but we’ll need more information before we conclude on that.
I’ll take it one day at a time and monitor how we react to overhead resistance levels & kma’s.
DEFENSE, BUT STAY POSITIVE & OPEN🛡️
LEADERS LIST
Overall leaders (PRIME Score)
STEM,SWAV,CPRX,MRSN,INSW,RXRX,XMTR,CEIX,ENPH,YPF,ARLP,PRVA,ARRY,AIV,HIMS,ELF,PRTY,CALM,EURN,DCPH,
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)
CPRX,MRSN,ARRY,STEM,RXRX,ENPH,YPF,DCPH,PRTY,XMTR,HIMS,PRVA,NAT,SPWR,ELF,INSW,WOLF,CSIQ,UDMY,AIV,
Relative Strength 1 Month (1M-RS)
AVYA,YPF,PRTY,PDD,CPRX,RXRX,BHC,INSW,MRSN,WFRD,XMTR,UDMY,NAT,INDI,CSIQ,ACVA,ULTA,MATV,LTHM,JKS,
Relative Strength 3 Month (3M-RS)
APDN,CPRX,MRSN,TH,STEM,PRTY,BFLY,ARRY,ZLAB,HIMS,AEHR,ENPH,RXRX,SWAV,YPF,PRVA,AGEN,DM,WOLF,XMTR,
Relative Strength 6 Month (6M-RS)
TH,CPRX,DCPH,MRSN,ARRY,APDN,CELH,SIGA,STEM,STNG,CEIX,STKL,ENPH,SWAV,PRVA,RXRX,HRB,ELF,BFLY,HIMS,
PT PORTFOLIO UPDATE
Recent operations:
New trades in ENPH (stop order), INDI, CPRX & TNA
Position management GAMEPLAN:
Maximum new exposure: 20% (60% if we close above the 50dma)
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
MRSN 0.00%↑ 🎖️
Biotech name that is set up for a continuation base breakout after an initial 50% push in 2 days following the last ER. Never really got below the 10dma
UPDATE: Bounced from that UTL and still above the 10dma and coiling nicely below that 8.02$ entry pivot.
Alert - 8.02$
80% prior leg up. Recent consolidation is a little lower at the 50dma, but I really like the volume profile in it with reversal on big volume compared to down days. I would use today’s high for an entry as this is a reclaim support level day. If we breakout higher, we confirm the follow-through higher IMO.
UPDATE: another tight day while closing above the 21dma. I’ll only have an alert on the DTL for tomorrow as the recent swing high is to far for me.
Alert - DTL
Close to a 100% move prior to that recent consolidation in which we held the 21dma. We bounced from the 21dma today and just below the DTL I was watching for a few days, but the only concern for me is solar leading names like ENPH, FSLR, SPWR & RUN did better today with a breakout. Is ARRY a laggard? It can still be a solid setup that might just have one day delay, we’ll see!
Alert - 22.75$ + DTL
CELH doesn’t need any presentation loll. I will look to re-position in this name as this just found support right at the recent base low (post-ER low) and also from the 50dma. We also broke out of that mini-channel DTL today, so more upside is very possible. Tomorrow, I will look at 101.83$ recent swing high pivot for an entry, but I want to see the volume picking up more than today…
Alert - 101.83$
AHT 0.00%↑ 🎖️
Big 120% run from the lows in the last rally, and we just built a nice BORL setup with the retest of the previous base breakout area and the 2 higher lows right at the 50dma. I like this recent action and volume profile on that pullback.
UPDATE: After the failed DTL breakout follow-through yesterday, we found support at the open right at the 50dma and we closed in the upper part of yesterday’s range. I will look at the same entry pivot.
Alert - 9.85$
PRVA 0.00%↑ 🎖️
Big 125% prior leg up and a recent consolidation above the 50dma. I like how this one can move pretty fast as we saw 2-3 weeks ago when it moved 15% on the alert I shared here. I like the current building action at the 21dma and most recent base level. I would look at 42$ pivot for an entry, or even 40.61$ if we get a light gap down tomorrow morning.
Alert - 42.00$
Still building that wedge after the recent PEG. Holding the 21dma and still looking at the DTL or 6.84$ pivot for an entry.
Alert - 6.84$ + DTL
🎖️ = 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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Hi Alex I'm a new subscriber and I seem to not understand your exposure rules. Yesterday you said: Maximum new exposure: 0% - RISK OFF (except if bullish scenario triggers - then max exposure @ 20% total). The bullish scenario triggered at the end of the day with the close above the 5dma, but now I see you entered 4 new positions. So either you entered at the end of the day or I don't understand how you entered in market hours if the bullish scenario had not yet triggered. I missed all entries because I was waiting for the close. Also, this newsletter is super helpful.
Thanks!!