Good evening folks,
Another very important letter tonight, as I’m seeing many positive clues again. We better get ready for tomorrow if things turn around!
Let’s go!!✌️🛡️
MARKET REVIEW
The market had AGAIN every reason to sell off with worst than expected PPI data, but just like yesterday on CPI print, the market was not able to follow through on the downside and came right back up. This is telling me that sellers are beginning to be tired down here and the market does not respond to bad news like it should/did in the last few months.
This is a clear change of character that you have to take note of. On top of that, we also see individual names decoupling the indices for almost 2 weeks now, especially in biotech & healthcare, solar and now we might see the participation of a big and very important group, semiconductors.
Don’t quote me wrong, I am not predicting the market to go straight up, I am simply noting supporting clues that add up as we confirm a potential bullish scenario with the price action.
The market rejected the UTL again this morning before closing above the very important 11689/11794$ support area. 2 times in a row with 2 big tails…clearly this level is seeing big buying.
We also breakout of our mini channel DTL in after hours, so let’s see if we can confirm & follow through with this breakout tomorrow.
Bullish scenario:
IF:
Being able to hold the 11794$ level & follow through on the channel DTL breakout
CLOSE above kma’s, especially 21dma
* I am changing the conditions here a bit, as in the last 2 days I got caught up in the false breaks below that chopped me between longs/SQQQ, I am changing for a CLOSE below these levels to add a level of confirmation needed in this choppy market.
THEN:
Add long exposure with respect to Progressive Exposure & Market based Exposure
Bearish scenario:
IF:
CLOSE below 11689$
CLOSE below UTL
* I am changing the conditions here a bit, as in the last 2 days I got caught up in the false breaks below that chopped me between longs/SQQQ, I am changing for a CLOSE below these levels to add a level of confirmation needed in this choppy market.
THEN:
Close long & add short exposure through SQQQ
MARKET BREADTH
We had 1M & 52W NNL across the board today. Negative A/D AGAIN TODAY… On the positive side, stocks above 50dma & 200dma is holding up pretty well AGAIN TODAY and consolidating at these levels for a few days now.
MMFI (Stocks > 50dma) - In fact, I very much like the fact that stocks are able to hold their ground above their 50dma like that and build a “tight” area above the big support area. We are also building higher lows.
VIX - Very interestingly, VIX spiked high, but we were not able to stay above yesterday's close. Again today we spiked but on a lower high, then we closed red and kind (ish) below the UTL & 26.83$ pivot
USD/CAD - Besides the bad market breath right now, this is the other concerning indicator I’m seeing. We had an enormous base breakout on the USDCAD today. This is a big move that normally is indicative of equity pressure. We’ll have to see if we hold that breakout tomorrow.
HYG/IEI - One of the risk indicators I use but I did not share very often is the credit spread. We had a big push recently, but since then we came back to retest the 1.59$ & 21dma level and we failed to breakout from here today…making a lower high. This is positive for the short-term for me.
PCCE (Equity Put/Call ratio) - We are starting to see some pretty high P/C spike in recent weeks. today, we had our 2nd highest high since 2020. 1.4, where we spiked today, is where we normally see market bottom reading historically. Not climax or sell/off, but a normal bottom.
ECONOMIC CALENDAR
SECTORS PERFORMANCE
Our 3 leading sectors are alive and that’s really positive if we want to get a chance to rally.
(SMH) Semis - As pointed out last night, I was looking at that higher low at the support level & breakout of the DTL, which we had today! Now I think semi’s sector is due for a rally, which we’ll have to confirm in the next few days. TOmorrow, we have to breakout that 21dma to have a striking chance.
(TAN) Solar Yet another save at the UTL, we really have to follow through and close above all kma’s tomorrow.
(XBI) Biotech Taking a day off with an inside day at the 10dma. This is ok and this sector is still leading.
LEADERS LIST
Overall leaders (PRIME Score)
SIGA,CELH,DVAX,STKL,QURE,HRMY,ACET,ARLP,RRC,VIR,AR,DQ,ABCL,AGEN,AMPH,HIMS,AVT,HRB,CALM,SRPT,
Fundamental leaders (FA Score)
MRO,AMR,HDSN,ARCH,SQM,OXY,LTHM,PLYA,METC,HCC,CPG,PXD,MXL,HST,HP,CF,SHO,OPEN,MAR,CVE,
Technical leaders (TA Score)
SIGA,QURE,STKL,ACET,ARLP,CELH,AGEN,DVAX,HRMY,ABCL,HIMS,CALM,SRPT,CEIX,AR,RRC,AMPH,HALO,BEAM,VIR,
Relative Strength 1 Month (1M-RS)
AGEN,SRRK,BEAM,IS,QURE,VCYT,ACET,IS,ARWR,SIGA,TSP,RCUS,VIR,FLYW,CDMO,SG,PTGX,FGEN,RH,SVC,
Relative Strength 6 Month (6M-RS)
SIGA,LNTH,CEIX,HDSN,VTNR,DQ,HRB,STKL,AMR,CELH,AR,OXY,ARLP,SQM,ARCH,EQT,JKS,GLNG,HRMY,EGY,
PT PORTFOLIO UPDATE
Alex’s FOCUSLIST
HRMY
HRMY is a biotech leading stock with impressive action in the last few weeks. It is consolidating very constructively above the breakout level and retested it again today. I like how we got support and closed almost unchanged on this weak market day.
Watch for a retake of the 55.14$ pivot (see on 65min timeframe as the first breakout thrust high) for a continuation entry.
Alert - 55.14$
CELH
I am still thinking that this is the potential TML of the next cycle, so you will see this name quite often until I can get back in again. Right now, we see a BO10PB & BORS setup developing. I will watch for either the DTL breakout or the 78.34$ pivot breakout for continuation. Pivot is a little far from here, so the DTL might probably give a lower risk early entry for now.
UPDATE: We made a nice inside day while being supported at the 10dma and breakout out intraday of the DTL, which I used to open a new position. The setup is still valid if someone wants to take the less risky 78.34$ pivot entry.
Alert - 78.34$
LI
Yeah…a Chinese stock :)
This one is simply setting up too good to pass over. This is also a larger market cap stock, so the risk is a bit less IMO. I will not trade a full position on it, but a 1/2 position is acceptable. I see a perfect BORL & BO21PB setup as we are retesting the breakout area. We were able to hold the 21dma 2 days in a row and are now above the support area. Also notice that we were able to hold the lows from the first area retest, this is constructive.
UPDATE: tried to breakout today but was not able to push higher. Will still keep this name in the FL tomorrow as the setup is intact.
Alert - DTL + 39.5$
STKL
Very powerful name that I missed the entry of the initial breakout. The initial 65% run in 3 days on the last ER is pretty impressive along with the nice VCP base it built afterward. We broke out on power last week and we are now building a nice consolidation at the 10dma.
UPDATE: supported again at the 10dma and UTL. Setup is still valid.
Alert - 9.11$
LNTH
LNTH is making its way into the focuslist after a few days of choppy action. I like how we made a higher low yesterday while holding the 50 & 21dma and also being able to reclaim the recent b/o pivot today after a nasty gap down. I would use the breakout swing high pivot as my entry for a continuation confirmation. ER on 27th July, it’s a rocket or nothing as we approach quickly the announcement date.
UPDATE: I took the trade of the DTL breakout today, which was a more aggressive entry, but the 69.08$ entry pivot is still valid.
Alert - 69.08$
ABCL
This is one of my current position and it’s acting amazing out of the stage 1 base breakout. This is exactly the kind of action you want to see after a breakout, the stock is supported on its first pullback of the 5 or 10dma in that case. If the market acts well and we get continuation confirmation here, I will probably add to my position on this name. We are looking at a classic BO10PB here with an early entry even being trigged today on the DTL breakout.
UPDATE: I got shaken out of this name today, and that was probably a mistake which I corrected by adjusting my rules for my bearish/bullish scenarios conditions. If we reclaim 11.6$ pivot, I will look to add back my position.
Alert - 11.60$
SWAV
A name that I am following for a while but is consolidating forever at the breakout area. We found good support at the 21dma today and we closed at highs while showing very high RS all day. I will look to use the 203.41$ pivot for an entry, which is the second breakout swing high in this base.
Alert - 203.41$
DQ
Another Chinese name…
If Solar was to lead again, this DQ name is the real leader in retrospect, more than ENPH. I will be looking to enter as we confirm the BORL setup. I have an interest in the 72.15$ pivot as it is an important S/R level intraday (65min) and would give an opportunity to enter at a better price & risk, but also being a bit more risky.
Alert - 72.15$
DVAX
One of the strongest biotech names of the past few weeks is now setting up for a classic BO10PB after its recent base breakout. When you miss the initial breakout, that’s the kind of good R/R entry I am looking for an entry. I will watch either the DTL or the recent 14.88$ recent swing high pivot for an entry.
Alert - 14.88$ + DTL
GTLB
A software name that a follow and traded for a while that is just being supported at every level down and is not really breaking down. I like how we’ve been supported at the 21dma for the 3rd day in a row…RIGHT at the breakout support area. I will watch for the channel DTL breakout or recent swing high pivot for an entry.
Alert - 56.60$ + DTL
REFERENCES
Articles on my system:
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Hi Alex, suggestion :). When you have this many setups, can you make a top 3 of your favorites? I'm, of course trying to do that myself, but i would love to hear your opinon!
Cheers