Good evening!
This was a very nasty day, market broke down after finding support yesterday. Is there still room on the downside, let’s find out!
Enjoy ! ✌️
Disclaimer: This newsletter is not financial or investing advice. The information is for education purposes only and reflects only my own operation.
Market REVIEW
Quite a nasty day confirming the downtrend even more as we could not hold yesterday 4219$ bounce and the close above 4277$. We sliced through all levels and went straight down to test 4138$ area a.h.
We are in that potential support zone from last March bottom action. Tomorrow, I will be watching if we cut through 4138, and also 4108$ that would marked a new low below Feb. 24th and would reset the ST cycle count.
Notice that we begin to approach 10% extension from 50dma & 7% on Russel 2K. In a normal market correction, we could see extension ranging from 10-15%. With rare exception of 20-25% extension in very deep correction like ‘08 & ‘20. Based on this, I think we have still room to run on the downside if we break through 4104/4138$ area. But until then, everything can still happen
With the VIX @ 33, expect wild swings on both sides during such corrective action.
Breadth:
Breadth was very bad today as well and confirmed the reading’s from yesterday. McClellan approaching oversold levels at -217. I think we could see another or two down day, but then we will be due for a ST reaction bounce imo based on 50dma extension, momentum readings, etc.
Sectors:
Everything got wrecked today except for Energy that managed to stay green. Still nothing popping RS out of this correction.
We will have to wait for the market to flush and then we’ll see sectors emerge has having clear RS.
Remember last weekend when I talked about Staples sector being a bad sign that might be a potential recession signal? Well, check which sector is the only green in the last Month?…
Portfolio UPDATE
With the Mega Cap earnings today a.h. (MSFT, GOOGL, IBM, V, etc.) I decided to close a good portion of my Short position before close.
Overall a very good trade that bring me back to ATH YTD.
New positions:
Trimmed positions:
SRTY ( Sold into strength 3/5 of total position for a 20% gain)
Closed positions:
Daily FOCUSLIST
Market definitely not healthy and don’t plan to initiate new long positions tomorrow and until market put a final flush or we make constructive action.
So, no FL tonight.
Relative Strength TRACKING
I’ll start tracking top fundamental stocks with highest 6 months Relative Strength, holding up the best short term. (10% 1M-RS + 90% 6M-RS ratio).
During market correction, you want to keep track of these names as they will be the one to watch when conditions improves.
Relative Strength - TOP 20:
PBF CRK NEX EQT ARCH VGR MRC AMR VLO INSW FLNG BMY PLAY TALO VST MPC AR DK REXR CEIX
REFERENCES
Articles on my system:
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