Good evening folks,
WHAT.A.DAY!
Let’s get ready for another very important day tomorrow!
✌️🛡️
MARKET REVIEW
The market reacted very positively to the CPI news this morning, jumping instantly 2.5% higher. That’s a big move, and as you’ll see in tonight’s letter, I really think this was a pivotal point in this market.
It’s always a big word to say because if you’re wrong it will surely come back to bite you …but I could see a scenario where we would have seen the bottom… But I’m still sick, might be the fever 😂
So, NQ jumped straight into 13356$ which was an important level as noted last night. It wiggled around it pretty much all day before closing strong above by the bell. That’s the ideal scenario I was hoping for in terms of indices price action, and we just had it.
What are the levels I’m watching tomorrow?
On the upside, I now want to see a breakout of 13555$ to confirm a continuation further above that big resistance area we are eyeing for a while now.
On the downside, I want to see NQ hold the 13356$ consolidation top level we just closed above. If this is really a big reversal and the market want higher, we should not close back below that.
We’ll be on the lookout for our 10-12% 50dma extension in the next few days/weeks.
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) - That is a big reversal in the market breadth and especially here on stocks > the 50dma. They found support at the 5dma and closed 10% higher.
Now on the upside, in 2000, 2008 & 2020 recovery, MMFI came around 83 and even in the 90s. So the two resistance areas will be the levels I’ll watch in the next few days for a potential reversal.
VIX - big big selloff of almost 10% which is EXACTLY what we wanted to see. (Expected) Volatility is coming OUT of this market and we are now at the VERY IMPORTANT 20$ level. We will be able to trend more relaxed now Mr.Market?
USD/CAD - Also the move we wanted to see on a good reaction, confirming the move on the indices. USD selling off big. Almost 1% vs CAD. Big move and losing the first big support area.
US10Y (US 10Y bond yield) - Yields unchanged, still holding that support area.
HYG/IEI (Credit Spread) - Rejection of the support area, and closing by 1.5%, which is a big move for credit spreads.
BTC/USD (Bitcoin) - Crypto ground support at the 50dma and RECLAIMED the resistance area which we’ll try to breakout once again.
NG_F (Natural Gas) - we have the DTL breakout we were looking for from the support area.
ECONOMIC & EARNINGS CALENDAR
SECTORS PERFORMANCE
(SMH) Semis - HUGE reversal of the 50dma retest yesterday. We closed above ALL KMA’s and above DTL.
(TAN) Solar - Confirmed the pivot breakout and went straight into the next resistance. We’ll see if we can still push through it, but this sector is clearly leading.
(XBI) Biotech - Also found support at the 5dma and broke the ST DTL. Volume a bit low, we’ll have to see if it can pick up tomorrow.
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: Last night, I was a bit worried as we came back to test pretty much all these stage 1 base support areas…today, you’ll that not 1,2, or 3 confirmed their stage 1 base breakout…but ALL SIX DID!
What is really giving my confidence that this is a pivotal point based on now 9 big sectors leading is that last night I highlighted that we were testing back these bases and we were either holding these support areas and bounced back higher creating a BORS, OR we would fail the breakout that was underway and undercut these big area.
Now that we confirmed the stage 1 base breakout on SIX pretty big sectors....along with the 3 we already had (SMH, XBI, TAN) we don't have a simple rally...we have broad market participation that can take us far.
(CIBR) Cybersecurity - Confirmed BORS, stage 1 base breakout & new high
(FDN) Internet - Confirmed BORS, stage 1 base breakout & (almost) new high
(IGV) Software - Confirmed BORS, stage 1 base breakout & new high
(XME) Metals & Mining - Confirmed BORS, stage 1 base breakout & new high
(XRT) Retail - Confirmed BORS, stage 1 base breakout
(XLF) Financial - Confirmed BORS, stage 1 base breakout & new high
Alex’s TAKEAWAYS:
Ok, that’s where I have to calm myself a bit. I really see today’s action as being pivotal and the CPI news giving the green light to the market.
Indices reclaim important prior resistance areas & 30wma
Now 9 BIG sectors participating with 6 confirming their stage 1 base breakout
Breadth is really good and at levels seen in important market recovery
Listen, I could be very wrong and the market roll over in the next few days or weeks, but what I see right now gives me enough confidence to play this as a bear market recovery and increase exposure until proven wrong.
LEADERS LIST
Overall leaders (PRIME Score)
TH,SIGA,BBIO,AHT,DVAX,AEHR,STEM,SWAV,AMC,STNG,BKSY,HIMS,CHPT,BEAM,ENPH,EURN,AFRM,PRCT,MRSN,PAYO,
Fundamental leaders (FA Score)
RES,HCC,MRO,SQM,DK,ERF,DVAX,MGM,DRH,TELL,LBRT,BHF,ENLC,SWAV,JXN,LC,TRGP,SLDP,WTI,CAN,
Technical leaders (TA Score)
SIGA,MRSN,CCXI,AEHR,STEM,BFLY,AMC,BBIO,TH,AHT,AFRM,HIMS,ENPH,CELH,BKSY,YELL,SPWR,BEAM,CSIQ,DCPH,
Relative Strength 1 Month (1M-RS)
AEHR,MARA,YELL,AMRS,CORZ,IS,RIOT,HIVE,HUT,COIN,AFRM,LAZR,BFLY,STEM,AMC,MRSN,SI,SIGA,TGTX,FUBO,
Relative Strength 3 Month (3M-RS)
SIGA,CCXI,MRSN,BFLY,BKSY,AEHR,AFRM,STEM,ABCL,DVAX,BBIO,AMC,NOVA,YELL,ENPH,BEAM,HIMS,CELH,AHT,PLUG,
Relative Strength 6 Month (6M-RS)
TH,SIGA,LNTH,STNG,HDSN,NFE,PRCT,ENPH,CEIX,CRK,MRSN,HRB,DCPH,SWAV,CCXI,CELH,EQT,DQ,AR,NOVA,
PT PORTFOLIO UPDATE
Tomorrow’s game plan:
I’ll try to add 1-2 names again tomorrow and I’ll try to get to 100% exposure pretty fast to catch the bulk of that momentum in order to trim into strength sooner than later.
Alex’s FOCUSLIST
CELH 🎖️
CELH reacted very well to last night's earnings and I’ll be looking to increase again my position tomorrow if we can reclaim 105.52$ which is the bottom of the resistance area. If we breakout of that area, we’ll be at ATH. One of the first growth stocks going into ATH… would be a big TML sign.
Alert - 105.52$
BEAM 🎖️
A biotech that I was eyeing for a while but wanted to let ER pass before buying. This one just had an impressive 154% run from the lows and created a very nice HTF and BO21PB set up in the last few weeks. We just had ER last night it gapped up and closed strong right below DTL. Tomorrow, I will be interested to enter either on the DTL breakout of 68.29$ previous swing high pivot.
Alert - DTL + 68.29$
ON
Semi’s name was just supported very strongly at the 21dma after a failed breakout attempt. If we can breakout of that DTL or 66.99$ pivot, we could try a second breakout attempt of that larger base.
Alert - DTL + 66.99$
LSCC 🎖️
Another very interesting semi’s name that was even stronger on that resistance area rejection yesterday as it found support at the 10dma. I will be looking at the base top 65.42$ pivot for a breakout signaling continuation higher.
Alert - 65.42$
3 more interesting semis play right now: ON, LSCC & PLAB. ON with stronger fundamentals, but LSCC growth is more interesting IMO. I discarded PLAB of focuslist because ER is in front of us compared to the 2 here.
CHPT
A name that I traded last week but I will be looking again for an entry off this BORS setup. We had a first breakout attempt of stage 1 base Monday on the gap up, but came to retest the base bottom level & 10dma, only to gap up above that area today. I’ll use today’s high for continuation confirmation.
Alert - 16.64$
🎖️ = Alex’s highest conviction setups
REFERENCES
Articles on my system:
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