April 2, 2019 - MDT Pro Tips A.M.

CURRENT POSITIONS:

GOGO Long at $19.93
Total Premium Collected $1.95

ASNA Long at $14.20
Total Premium Collected $0.75

DUST Long $4.50
Total Premium Collected $0.70

SNAP Long at $14.54
Total Premium Collected - $1.65

RRC Long at $11.85
Total Premium Collected $0.70

RIG Long at $8.81
Premium Collected - $0.81

FEYE Long at $17.18
Total Premium Collected $0.80
Short April 12th - $17.50 call @ $0.25

FCX Long at $12.74
Total Premium Collected $0.73
Short April 12th - $13.50 call @ $0.25

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With the market bounce yesterday, I suggested you re-establish short call positions against two of the three deals that expired on Friday.

You should have sold the April 12th series against the FEYE and FCX holdings. Both resulted in collecting another 25 cents per share.  The only difference was that on FEYE the strike was the $17.50 strike and on FCX it was the $13.50.

It goes without saying that you should only be selling these calls if you own the stock.  Sometimes I neglect to mention this in the alert, but I do want to make sure you are aware of this.

I will never recommend selling naked calls.  If I suggest you sell a call option without owning the stock, I would sell a higher priced call against the short calls.

Ok, now onto the markets.

Yesterday saw a massive move in the markets.  For the day, the S & P 500 closed 32.79 points higher.  It closed out the day at 2,867.19.

And with a close above 2,832.03, this now puts the objective for the S & P 500 to the major 2,890.60 level.

Considering that is the level the market failed at back in September last year, it will be interesting to see if the market can now clear it cleanly.

The intra day range ended the day at 20.77.  But, if you factor in the bullish gap of 14.23, the high to high move was 33.37 points.

For the day, the S & P 500 closed at 89% of the daily bar.  This puts the odds of the market continuing higher at around 90%.

Support from yesterday's daily bar is in the 2,857 to 2,859 area.

I know I tend to mention the extreme bands to the point where you may be tuning out my comments.  But, I do want to make a comment about them.

When the S & P 500 bottomed out back in December, the bottom was under the extreme lower band on the daily chart.

As you know, this measures an extreme oversold condition.  No guesswork involved.  Price falls under the bollinger band set to 253 days and a standard deviation of 2.576 and it is by definition oversold.

A child could look at the chart and see the setup.

Once price closed back inside lower the band, the target was back to the midband.  One of two things can happen.  And they are the only options.

Either price is turned back at the midband.  And in that case, the move is usually to test the lower band.

The other option is that price clears the midband.  And in that case, the midband should act as support.  And the typical target is back to the upper band.

Is there something that can help us to determine if the price will clear the midband?

The only indication I have found is the money flow.  If the money flow is positive and the price is at the midband, it will typically clear the midband.  If the money flow is negative, it usually fails.

Now, this is not foolproof, but it can help to determine if the price can clear the midband or not.

I bring this up for a few reasons today.

The first is that when the S & P 500 rallied back to the midband in early February, it spent about a week trying to figure out which direction the market would go.

At that time, the money flow was positive and as it turned out the S & P 500 cleared the midband.

After clearing the midband, the market came back to test it.  This test happened on March 8th.

Since then, the S & P 500 has moved up and away from the midband.

The upper band now reads 3,016 and at this point, that should be the target,  But, the S & P 500 will need to clear the 2,890.60 resistance level first.

Pre open the S & P 500 is trading about 1.50 points higher.

Here are the Key Levels for the Markets:

$VIX: 

Minor level: 22.66
Major level: 21.88 
Minor level: 21.10 
Minor level: 19.53 
Major level: 18.75 
Minor level: 17.97 
Minor level: 16.41
Major level: 15.63 <
Minor level: 14.85 **
Minor level: 13.28
Major level: 12.50

The VIX closed out the day at 13.44.  Target should be back to the major 12.50 level. And the VIX is now within 85 cents of that target.

As you know, this is a level where the VIX will typically find support.  I will continue to monitor the VIX as we trade closer to it.

14.06 should offer resistance.  And if the VIX breaks under 13.28, look for that move to 12.50.

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 level: 2,636.75 
Minor level: 2,597.65 

Target is now up to the 2,890.60 level.

2,847.70 should offer support.  Minor support is at 2,861.

The market is a bit overbought in the short term, but you still want to be buying against support.

Both the 30 and 60 minute charts continue to be bullish.  So, bias is still to the upside.  Technical support is at 2,815.

QQQ:  

Major level: 193.75
Minor level: 192.19
Minor level: 189.06
Major level: 187.50
Minor level: 185.94
Minor level: 182.81 
Major level: 181.25 <
Minor level: 179.69 **
Minor level: 176.56 
Major level: 175.00 
Minor level: 173.44 
Minor level: 170.31 
Major level: 168.75 
Minor level: 167.19  

The QQQ closed at 181.02.  "The upside objective should be to 181.25.  Look for a push up to the 181 area."  From yesterday ... target hit!  Again.

181.25 should now be support.

Like the S & P 500, both short term charts are bullish.  Technical support is at 179.  Continue to buy against support.

IWM:
 
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 
Minor level: 154.69
Minor level: 151.56 **
Major level: 150.00 <
Minor level: 148.44

The IWM closed at 154.076.  Look for a test of 156.25.

But, we still have the midband overhead as resistance.  That level is 155.96.  Considering all the major markets have cleared their midbands, I do expect the IWM to follow suit.

151.56 should offer support now.  And 153.13 as well.  And 151.80 should offer technical support.

TLT:  

Major level: 128.13
Minor level: 127.74
Minor level: 126.95
Major level: 126.56 <
Minor level: 126.17
Minor level: 125.39 
Major level: 125.00 
Minor level: 124.61 
Minor level: 123.83
Major level: 123.44
Minor level: 123.05
Minor level: 122.27

The TLT closed at 124.37.  The TLT broke under the upper band and closed under it.  But, we have been saying that the TLT is overbought in the short term.

123.44 should be support.  Short term charts remain bullish, so I do expect a rally.

GLD:  

Major level: 126.56 
Minor level: 126.17
Minor level: 125.39
Major level: 125.00 
Minor level: 124.22 
Minor level: 122.66  
Major level: 121.88 <
Minor level: 121.09 
Minor level: 119.53 
Major level: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75

The GLD closed at 121.53.  Closed under the major 121.88 level.  A close today under it and it could drop to 116.

The next minor level on the downside is 121.09.  If the GLD holds at this level, it should bounce.  If not, look for it to drop.

The 60 minute chart is still in a downtrend.  So, weakness could come in the short term. 123 is technical resistance.

XLE: 

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 < 
Minor level: 64.85 
Minor level: 63.28 
Major level: 62.50 
Minor level: 61.72 
Minor level: 60.16 
Major level: 59.38 

The XLE closed at 66.99.  At this point, I would expect a move up to 68.75.

But, the XLE is still trading just under the midband on its daily chart.  That price level is 68.80.  The XLE will have to, of course, clear this level.

The XLE should open above 66.  66.41 is short term support.

Short term charts remain bullish.  Buy against support.

FXY:

Major level: 89.84
Minor level: 89.65
Minor level: 89.26
Major level: 89.06
Minor level: 88.87
Minor level: 88.48 
Major level: 88.28 
Major level: 87.50 
Major level: 86.72 <
Major level: 85.94 <
Minor level: 85.75
Minor level: 85.36 
Major level: 85.16 
Minor level: 84.97 

The FXY broke and closed at 85.63.  Finally broke down from the midband.

If the FXY cannot reclaim the 85.74 level, look for a drop to 85.

AAPL:

Major level: 200.00
Minor level: 198.44
Minor level: 195.31
Major level: 193.75
Minor level: 192.19 **
Minor level: 189.06
Major level: 187.50 <
Minor level: 185.94
Minor level: 182.81
Major level: 181.25 

Apple closed at 191.25.  Watch to see if the midband holds as support.  The midband is 186.93 and Apple is moving up and away from it.  This should be support.

And both short term charts remain bullish, so wait for an entry to go long.  

189.06 should offer support and a great place to go long.  Will follow closely now.

WATCH LIST:

Bullish Stocks: CMG, AVGO, COST, MA, SHOP, AMT, MCD, CLX, HON, V, KMB, DRI, HSY, PYPL, YUM, WING, EPR, WPC, SBUX, CLH, THS, RIO

Bearish Stocks: NOC, LLL, HUM, BIDU, CTXS, ALL, SWKS, SINA, WDC, GOOS, FLIR, Z, YELP,

Be sure to check earnings release dates.