PrimeTrading daily Update & Focuslist - 05/12 🖊️
Selling pressure continues as CPI comes worst than expected
Disclaimer: This newsletter is not financial or investing advice. The information is for education purposes only and reflects only my own operation.
Well, CPI data came worst than expected this morning and we saw big volatility pre-market and right at the open. Market kinda hold until noon where we bear took control for the rest of the day.
SPX was not able to hold 3964$ today and we closed below it. Notice how we also rejected both the channel DTL & the 5dma for the second time now.
Next potential support is 3832$ from early ‘21 structure.
We begin to be pretty extended from the 50dma, specially for NDX @ 13% and same for RTY. Extreme bottom will occur between 15-25%. So we’re definitely getting in that zone with another 2 to 12% move. Will keep an eye on this in the next few days.
We live below all kma’s, meaning it’s a full RISK-OFF environment for me currently.
Stocks > 200 now @ 20% and > 50 is getting at extreme level here at 12%. Below 10% is where we had major bottom in the past. We could really continue down, but at some point, being oversold like we begin to see we’ll have to have a good ST rally at least.
McClellan just under -231, we’re getting extended on the downside here but still I consider extreme below -250.
Eq. P/C ratio decreased today @0.82 (+0.14) and P/C ratio at 1.16 is not yet extreme.
VIX decreased today, that’s the very interesting part… We closed at 32.5, 1% lower. With such extreme oversold breadth and a close 1.6% lower on SPX, I would have said that expected volatility would have picked up…but quite the opposite.
Maybe we’ll have a small ST rally here without conviction to close the week, or we really get our final flush that would bring breadth at extreme levels along a spike on VIX above 38. Keep an open mind.
Tomorrow 8:30 before market open we have another important inflation economic release. Producer Price Inflation (PPI) will either add fuel to the fire, or calm the market with good numbers. Personally, I do not expect a surprise on the good side here.
Well, no follow through on Semi’s & Biotech sectors today.
Energy & defensive sectors continue to hold better in this market correction.
Nice 50dma shakeout below 50dma today in Crude Oil CL_F. This could really fuel another Oil stock run in the coming days if we follow through tomorrow.
No new positions today. I remain 100% in cash and wait for the market conditions to improve.
Don’t try to play hero and get paper cut trying to guess the bottom and front run a few % on a rally. Not worth it, been there.
New positions:
Trimmed positions:
Closed positions:
Only 3 names in the daily FL tonight. Setups are still rare and we’ll have to see if we can close above either the 5dma or the SPX channel DTL before committing any capital.
If alert trig and we have good market action, I might take the trade but treat it as a day trade only. No overnight exposure in a market below the 5dma.
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