Good evening folks,
Ok, tonight will be a lighter version of the newsletter, sorry about that. Started to be very sick today and not easy to concentrate.
Good thing it comes tonight anyway, market clearly searching for a direction and waiting for CPI/Inflation data Wednesday. Tomorrow will be a day to sit on our hands.
✌️🛡️
MARKET REVIEW
The market opened the week very strong this morning, only to fade everything after the first trading hour. Classic gap up Monday you will say, and you’re totally right ;)
NQ tried to breakout of recent consolidation at 13356$ but failed the breakout. We then were able to stay within the consolidation area with a close above 13108$ pivot & the 5dma.
This market is strong, but it is clearly waiting for Inflation/CPI data Wednesday before deciding which direction it will go. I would expect the market to stay within that consolidation area tomorrow as well (13356/13108$)
What are the levels I’m watching tomorrow?
On the upside, I want the market to break out of the last swing high 13356$ pivot. This would indicate a potential continuation higher.
On the downside, I want to see NQ hold the 13108$ resistance bottom level. If we can hold the 5dma AGAIN, this would be very bullish. I want to give some room to this market to consolidate above these levels.
But remember, I won’t give much weight to tomorrow’s action as Wednesday's CPI data will really decide the direction IMO.
BULLISH scenario:
We are now in my bullish scenario until further red flags or consolidation.
IF:
THEN:
BEARISH scenario:
I give some leeway to the market to consolidate in a healthy manner before switching to a bearish scenario. Remember, the market & stocks don’t move in straight lines. We have a rally, watch how we react on the pullback and especially on the kma’s retest.
IF:
CLOSE below 12655$
CLOSE below 50dma
THEN:
Threat this reversal as a potential rollover
MARKET BREADTH
MMFI (Stocks > 50dma) - Gap up & fade
VIX - Tried to spike, but was not able and closed almost unchanged from Friday’s close. Waiting at important 21.21 pivot.
USD/CAD - That’s the move we wanted to see on the USD! Look how we faded the spike from Friday that really got me worried.
US10Y (US 10Y bond yield) - Same here, that’s the move we wanted to see after that big spike. We want to see it come down further.
HYG/IEI (Credit Spread) - Green day, but no red flags.
BTC/USD (Bitcoin) - Crypto was very strong today with a 24280$ breakout attempt. Faded a bit, but still closed in the upper half. Also like the volume profile in that base.
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
(SMH) Semis - Came under pressure following NVDA guidance, but managed to find very good buying at the 10dma and closed very strong. I see this as a positive sign. I was looking for consolidation, that’s what we have.
(TAN) Solar - False breakout at 86.06 at base top. Not a good look, need more time.
(XBI) Biotech - Continue to be very strong as it held the gap up, unlike many other strong sectors as you’ll see below.
In addition to these sectors that lead for a few weeks now, I see for the first time in a long time many big sectors breaking out of stage 1 bases and even retested these areas with success on Friday.
UPDATE: As you’ll see, pretty much all these sectors I was watching last night opened strong but faded the move. We are still well above support levels and we’ll have to see Wednesday's action before taking action on any of this.
(CIBR) Cybersecurity - Gap up & fade, but still above Friday’s high.
(FDN) Internet - Gap up & fade, but still above Friday’s high.
(IGV) Software - Gap up & fade
(XME) Metals & Mining - Gap up & fade, but still above Friday’s high.
(XRT) Retail - That’s the strongest sector today as it held the gap up and even pushed 3.6% higher on 150% volume.
(XLF) Financial - Gap up & fade, but still above Friday’s high.
Alex’s TAKEAWAYS:
The market still looks strong and doesn’t seem to want to roll over before Wednesday. CPI will really give this market direction, so it’s a wait & see situation tomorrow.
LEADERS LIST
Overall leaders (PRIME Score)
CELH,DVAX,SIGA,BBIO,TH,AHCO,BEAM,ENPH,HIMS,AMC,STEM,GFF,PLAB,AIV,DCPH,BFLY,SQM,WMS,CHPT,AHT,
Fundamental leaders (FA Score)
AMR,MRO,HCC,SQM,DK,ERF,DVAX,MGM,DRH,TELL,METC,LBRT,BHF,ENLC,JXN,LC,TRGP,WTI,CAN,MPC,
Technical leaders (TA Score)
SIGA,CELH,TH,ENPH,AMC,BBIO,AHCO,STEM,BFLY,DCPH,YELL,DVAX,HIMS,GFF,PLAB,WMS,BEAM,CSIQ,NOVA,ULCC,
Relative Strength 1 Month (1M-RS)
YELL,SI,STEM,CORZ,SIGA,BBIO,BFLY,COIN,MNDY,PLUG,WMS,RIOT,AFRM,HUT,MELI,FTCH,TEAM,APPS,PCOR,ONON,
Relative Strength 3 Month (3M-RS)
SIGA,CELH,AHCO,BFLY,BKSY,DVAX,TH,BEAM,BBIO,YELL,AMC,FGEN,ENPH,DCPH,STEM,HIMS,ELF,SWAV,HRB,CPNG,
Relative Strength 6 Month (6M-RS)
TH,SIGA,LNTH,VTNR,NFE,DCPH,CEIX,ENPH,CELH,PRCT,CRK,EQT,HRB,AR,DQ,SQM,AMR,AHCO,NOVA,AMC,
PT PORTFOLIO UPDATE
Tomorrow’s game plan:
Sit on my hands and try to get some rest! I plan to be ready for Wednesday very important day :)
Alex’s FOCUSLIST
VIR
A biotech stock that I trade on the first breakout leg out of stage 1, but now that it consolidated back to the 50dma and breakout area and it cleared ER, this is shaping up for a potential continuation and a second leg up. I will use the 30.59$ pivot as I’ve missed the last swing high of the consolidation.
Alert - 30.59$
HDSN
A name with great fundamentals that just had ER last week and got bought pretty strongly on that ER reaction. It found support at the 50dma and Friday action really brought it back into the resistance area. I will be looking at the 9.79$ pivot (recent swing high on the first breakout attempt) for a continuation and second breakout attempt confirmation. Nice shakeout.
UPDATE: HDSN was not able to hold Friday’s gain, but we found good support at the 10dma and closed back in the support area. The setup is still valid for me.
Alert - 9.79$
🎖️ = Alex’s highest conviction setups
REFERENCES
Articles on my system:
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