March 20, 2018 - MDT Pro Tips A.M.

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.

CURRENT POSITIONS:

GOGO Long at $19.93
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DUST Long $4.50
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AMC Long at $15.27
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UNIT Long at $17.00
Premium Collected - $0.35

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Based on the contraction on Friday, we were expecting an expansion. And that certainly happened yesterday.

The market opened with a bearish gap of 10.63 points yesterday and never bounced at all. The open turned out to be the high for the day. Usually, after a doji price bar, I expect the close to be a reference point for the day.

As it turned out, the market never tested the close and headed down day all day.

The low for the day was at 2,694.59. And the range for the day was 46.79. But if you factor in the gap, the range was 57.42 points.

With an average true range of 38.20 points, yesterday's range, including the gap, was 122% of the average.

And the weekly average range is 68.88. This means that in one day, the market almost achieved the weekly range.

For the day, the S & P 500 closed at 39% of the daily bar. This puts the odds of a violation of the low around 60%.

The question is how deep could this sell off go?

There is a minor support level at 2,675.80. This is the key level in the short term. I say this because if the S & P 500 closed under 2,675.80 for two days, I would expect a drop to the 2,602 to 2,626 area.

There is also the major support level at 2,656.30. A drop to 2,656.30 would be a normal pullback in a bull market. And yesterday, the S & P 500 closed under the minor 2,714.88 level. So, a close under 2,714.88 today would indicate a drop to 2,656.30.

By watching these levels, we should have a scenario where this sell off should stop.

The VIX should also help to determine when the market should reverse.

The VIX stalled right at a minor resistance level, which was 21.88. If the VIX does take out 21.88, I would expect resistance at 25.

As the VIX heads down, the markets should head up.

Here are the Key Levels for the Markets:

$VIX:

Major level: 31.25
Minor level: 29.69
Minor level: 26.56
Major level: 25.00
Minor level: 23.44
Minor level: 20.31
Major level: 18.75 <
Minor level: 17.19 **
Minor level: 14.06
Major level: 12.50
Minor level: 10.94

The VIX ended up closing at 19.02. The VIX spiked 20.38% yesterday. Watch the minor 20.31 level. The VIX would need two closes above 20.31, to make a move up to 25.

Minor support is now at 17.19. And minor resistance is at 21.88.

$SPX:

Major level: 2,890.60
Minor level: 2,871.08
Minor level: 2,832.03
Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93
Major level: 2,734.40
Minor level: 2,714.88 **
Minor level: 2,675.83
Major level: 2,656.30

Minor support is at 2,700.20. And if this level is violated, watch to see if the S & P 500 can hold the 2,675.80 level.

2,724.60 should now be resistance.

QQQ:

Major level: 175.00
Minor level: 173.44
Minor level: 170.31 **
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25

The QQQ closed at 167.10. 167.19 is a minor level and if the QQQ closes under 167.19 today, it should drop to 162.50.

Both short term 30 & 60 minute charts are still in uptrends. So, the QQQ should find support after this pullback.

IWM:

Major level: 162.50
Minor level: 161.72
Minor level: 160.16
Major level: 159.38
Minor level: 158.60
Minor level: 157.03 **
Major level: 156.25 <
Minor level: 155.47
Minor level: 153.91
Major level: 153.13

The IWM closed at 156.28, just 3 cents above the major 156.25 level.

155.47 is a minor support level. Two closes under 155.47 and the IWM could drop to 153.

TLT:

Minor level: 120.70
Major level: 120.31
Minor level: 119.92 **
Minor level: 119.14
Major level: 118.75 <
Minor level: 118.36
Minor level: 117.58
Major level: 117.19
Minor level: 116.80
Minor level: 116.02
Major level: 115.63

The TLT closed at 119.43. A close today under 119.92 and I would expect a test of 118.75.

118.36 is a minor support level.

The short term 60 minute just crossed into an uptrend, so I expect the TLT to find support and head back up.

GLD:

Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13
Minor level: 127.35
Minor level: 125.78 **
Major level: 125.00 <
Minor level: 124.22
Minor level: 122.66
Major level: 121.87

The GLD closed again under the 125 level. It closed at 124.87. Watch to see if it can close under 124.22. If it can, a drop to 122 would be expected.

123.44 is a support level. If the GLD does close under this level for two days, it could drop to 119.

Short term charts remain bearish, so I am biased to the downside.

XLE:

Minor level: 76.95
Major level: 76.56
Minor level: 76.17
Minor level: 75.39
Major level: 75.00
Minor level: 74.22
Minor level: 72.66
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
Major level: 68.75 <
Minor level: 67.97
Minor level: 66.41 **
Major level: 65.63

The XLE closed at 66.27. The XLE did close under the midband on its daily chart, which is 66.69. This should now be resistance.

I do expect support at 65.63. Watch this level because if the XLE cannot hold support at 65.63, it should drop further.

FXY:

Major level: 91.41
Minor level: 91.22
Minor level: 90.83 **
Major level: 89.06 <
Minor level: 88.87
Minor level: 88.48
Major level: 88.28
Minor level: 88.09
Minor level: 87.70
Major level: 87.50
Minor level: 87.31
Minor level: 86.92

The FXY closed at 90.32. I would expect a test of 89.06.

Minor support is at 89.84. Yesterday's high was within 8 cents of the upper band on its daily chart.

AAPL:

Major level: 187.50
Minor level: 185.94
Minor level: 182.81
Major level: 181.25
Minor level: 180.47
Minor level: 178.91 <
Major level: 178.13
Minor level: 177.35
Minor level: 175.78
Major level: 175.00

Apple closed at 175.30. Apple tested the 175 level. It got below 175, but recovered the level by the close. Watch to see if Apple can hold 175.

Continue to buy against support.

WATCH LIST:

Bullish Stocks: NTES, GWW, AVGO, NVDA, ADBE, ALNY, AMT, ZBRA, VRSNm GRUB, ALL, CTSH, AABA, WEC, LUV, DAL, SQ, CAR, WGO, TRIP, TWTR

Bearish Stocks: TSLA, ZBH, DISm CNI, BG, WBA, WBA, AIG, HOG, DISH, BITA

Be sure to check earnings release dates.