Good evening folks! 👋
What we’ll cover in the Newsletter tonight:
General market analysis ($NQ/$ES)
Market Breadth & Internals
Economic Calendar
Sectors Review
Leaders list
Alex’s Portfolio update
Focuslist including setups, alert levels & explanation
I am always trying to add value to the Newsletter and the overall PrimeTrading content by listening to members’ feedback & suggestions, one of those is to track indices that you folks rely on for trading decisions. So starting from tonight, I’ll start using the NASDAQ & S&P500 as the indices of my GENERAL MARKET ANALYSIS section.
If you have other suggestions or feedback, you can leave a comment!
GENERAL MARKET ANALYSIS ($NQ/$ES)
NASDAQ ($NQ) Weekly
We have an outside bearish week with a powerful 10&30wma rejection. This is pretty bearish in my book, but anything can happen following FOMC Wednesday.
NASDAQ ($NQ) Daily
We found support at the 11794$ pivot Friday and closed near the open as well. I won’t give too much weight to Friday’s action because of Opex & Quad Witch, but we still held a key level.
$NQ levels on the upside
12017$ pivot from pre-CPI bottom could be an intermediate potential resistance
12168/12262$ area from June/July and more recently following CPI rollover is an important area for a potential retest
the 5&10dma can come into play tomorrow
$NQ levels on the downside
The potential support is really that 11689/11794$ area
S&P500 ($ES) Weekly
S&P500 ($ES) Daily
$ES levels on the upside
3977/4016$ from the past week’s action could be a good potential resistance for a retest on a bounce
the 5&10dma can come into play tomorrow
$ES levels on the downside
3855/3903$ area from the pre-CPI bottom that we’re in is really potential support of interest
MARKET BREADTH & INTERNALS
NYHL (New 52W Highs - Lows) - NNH accelerated on the downside again Friday @ -349.
NYAD (Net Adv/Decl) - Accelerated @ -1486.
MMFI (Stocks > 50dma) - Big gap down and closed above the open, but still trending down.
MMTW (Stocks > 20dma) - Big gap down and closed above the open, still trending down but it’s a higher low so we’ll have to see if this materializes into a bounce or continue lower.
MCOSINYA (McClellan Oscillator) - McClellan is accelerating in the negatives again @ -167.
VIX - VIX with a very interesting day, but keep in mind that it was Opex Friday, so it might have had an impact on the VIX. Still, we tried to breakout from that consolidation & 27.67$ level but failed. We are back within that box but above all kma’s.
PCCE (PUT/CALL EQUITY RATIO) - 1.207. We begin to spike…this could get interesting. We even had intraday readings > 1.4 Friday.
DXY (US $) - US$ tried to breakout to a new high above 109.97$ level but failed and came back at the 10dma. We’re still in a wait & see situation here.
US10Y (US 10Y bond yield) - 10Y continues to push into that base resistance area. So far we’ve got a new high Friday, let’s see if tomorrow we breakout or not.
IEI/HYG (Credit Spread) - Credit Spread with a very interesting reversal on volume Friday. We are still above all kma’s but that’s still a good sign and one that I’ll look closely at in the next few days if we continue lower or spike.
BTC/USD (Bitcoin) - Bitcoin was not able to bounce from that support area and got rejected at the 10dma. Look pretty weak and new lows seems in the cards…
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ECONOMIC & EARNINGS CALENDAR
This is FOMC week! We have an interest rate hike Wednesday along with Jerome Powell press conference which should move the market one way or another. This is a much-awaited event and we might see very choppy action Monday & Tuesday waiting for this FED decision and press conference @ 14:00 Wednesday.
Next FOMC Fed rates expectations are trending towards a 1.0% increase since this morning's CPI release.
100% chances of >0.75% rate hike
85% of a 0.75% hike (⬆️ from Friday)
15% of a 1.0% hike (⬇️ from Friday)
Will continue to monitor until next week…
SECTORS PERFORMANCE
Leading sectors (weekly top 5):
(TAN) Solar - Leading sector. Found support at the 50dma & 83.30$ pivot we follow for quite a while. We also made a higher low. We are still building that wedge in a healthy way IMO, more so by considering the current market action.
(XLE) Energy - Energy came under pressure Friday, but we seem to find support at the stage 1 base support area and 50dma. If we hold here, I’ll be watching the DTL for a potential continuation higher.
(PBW) Clean Energy - Still WBPB setup in play after Friday's higher low & 50dma retest.
(PEJ) Leisure & Ent. - Also WBPB is underway with a stage 1 base support area & DTL retest Friday. We also have a higher low, but still below all kma’s.
(XBI) Biotech - Was not able to hold the 50dma Friday and came back lower to the stage 1 support area Friday on volume. Not the best action, but we are still on higher low and above that stage 1…so let’s keep it close and monitor it.
Alex’s TAKEAWAYS:
We have a market below all kma’s, internals not looking good, with FOMC on Wednesday and literally only 10-20 quality names in the entire market holding up and that everyone is watching… So for me, it’s really not a market worth being invested in right now.
I might play some TQQQ/SQQQ day trades before FOMC, but I expect the market to be possibly choppy Monday & Tuesday, so playing with very small positions.
You know the levels of interest to play these, they are in the “GENERAL MARKET ANALYSIS” section above.
DEFENSE, BUT STAY POSITIVE & OPEN🛡️
LEADERS LIST
Overall leaders (PRIME Score)
STEM,YPF,INSW,TH,XMTR,NAT,EURN,ENPH,DHT,AEHR,DCPH,LTHM,CCRN,CELH,RVNC,FRO,SPWR,RUN,GERN,WOLF,
Fundamental leaders (FA Score)
AMR,HCC,DK,MRO,ERF,DVAX,MGM,DRH,TELL,LBRT,BHF,ENLC,SWAV,TRGP,WTI,MPC,FANG,KOS,ARCH,CALM,
Technical leaders (TA Score)
YPF,STEM,RVNC,NAT,DCPH,ENPH,DHT,XMTR,INSW,GERN,EURN,TH,CCRN,RUN,FRO,SPWR,WOLF,PLUG,VLD,LTHM,
Relative Strength 1 Month (1M-RS)
AMRS,FUBO,RVNC,YPF,CHPT,BHC,MNDY,NAT,RXRX,RCL,COIN,DCPH,RUN,AGL,GTLB,ADT,XMTR,NTNX,STEM,FTCH,
Relative Strength 3 Month (3M-RS)
VLD,APDN,STEM,TH,GERN,RXDX,CPRX,YPF,AEHR,RVNC,MRSN,WOLF,AMRS,BFLY,CELH,SWAV,PLUG,ENPH,TGTX,NAT,
Relative Strength 6 Month (6M-RS)
TH,GERN,STNG,DCPH,INSW,CRK,CEIX,MRSN,STKL,CPRX,ENPH,ARLP,HRB,EQT,CELH,SIGA,EURN,NAT,PRVA,YPF,
Potential True Market Leaders (TMLs)
Following the recent day’s action, I don’t plan to make any long trades tomorrow the trend is clearly down and we’re still below all kma’s. So as we’ll let the market do all it wants below those kma’s, we’ll still monitor the leadership stocks during that next leg down so that we’re ready to jump on the true market leaders (TML) once the market reverse & gives us another window of opportunity.
PT PORTFOLIO UPDATE
Position management GAMEPLAN:
Maximum new LONG exposure: 0% (based on Portfolio & Market exposure model)
Position size: 1/4 positions max (5% 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
Only 2 names in the FocusList tonight. I don’t plan to go heavy on those but might try very small 1/4 positions if the market is breaking out of the 5dma tomorrow on a bounce attempt in front of the FOMC meeting. Always be prepared.
WBPB setup setting up after a channel breakout and retest of the 21dma. Now we are building pressure right below the 305.49$ recent swing high pivot. Above ALL kma's...not a lot of liquid stock is showing that much strength.
One of the best-looking charts and setting up to be one of the next cycle TML IMO. Still holding the previous base high of 305.88$ & building higher lows at the 21dma.
The Relative Strength of ENPH & the SPY is in another world… we are already at a new high and trending above the 5wma. This is what a TML looks like.
🎖️ = 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.
Want to know how to execute these setups?
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REFERENCES
Articles on the system:
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Hey Alex, does the monster down volume on RXDX recently not bother you?
Great content. Have been trading with similar style for about 7 years. Full time. Sharpening my tools with some of your techniques. Thank you. This is a nit, but I think you will find most people using black and white bars set up charts with black candles as down bars. Not sure. Green vs red everyone gets. Black down is very confusing. Thanks again and keep up the good work.