August 20, 2019 - MDT Pro Tips A.M.

CURRENT POSITIONS:

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CHKP Long August 16th - $110 call for $2.70
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XLNX Long September 20th - $110 call for $4.80
XLNX Short September 20th - $115 call for $2.70

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Yesterday, the market continued to bounce from its oversold condition. The S & P 500 closed 34.97 points to the upside, extending the move from Friday.

The intra day range was only 17.52 points. This was due to the fact that the S & P had a bullish gap open almost 20 points above Friday's high.

If you measure the move from Friday's high to today's high, it comes to 37.37 points. This was just under the daily average true range, which is now 42.98.

The question now is will this move continue?

I bring this question up because the short term charts are still bearish for the S & P 500.

But, the last swing bottom for the S & P, which was 2,825.51 stopped right at the bottom band on the 60 minute chart.

Had price broke under the lower band at that time, then there would be a very high probability of another downleg.

This is what happened on the downswing into the August 5th low. And the price dropped under the lower band again on August 7th.

So, the drop into the August 15th bottom was the retest which is expected.

But, the short term charts are still bearish, so another downleg would not be out of the question. In fact, I am biased for one.

There are a few reasons for this. Of course, the first is that the short term charts are still bearish.

And the second is the fact that there are open gaps below the market. Usually gaps get filled and I don't think this time will be any different.

The first open gap is at 2,984 and the second gap is at 2,855.

And a key level on the downside is 2,851.60. This level should offer support on a pullback. And if the S & P does close under it for two days, it could drop to the 2,705 area.

Support from yesterday's daily bar is in the 2,918 to 2,922 area.

Pre open, the S & P is relatively flat. Watch the support area above because if price breaks under it, then it becomes resistance.

Earnings continue this week. CRM reports Thursday after the close. And SPLK reports tomorrow after the close.

Here are the Key Levels for the Markets:

$VIX:

Major level: 28.13
Minor level: 27.35
Minor level: 25.78
Major level: 25.00
Minor level: 24.22
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

The VIX closed out yesterday at 16.84. It closed 1.63 points lower. This was a drop of 8.83%.

There is minor resistance at 17.19. So, watch this level today. Also, a close under 17.97 today and the VIX should drop to 15.63.

SPX:

Minor level: 3,164.08
Major level: 3,125.00
Minor level: 3,085.95
Minor level: 3,007.85
Major level: 2,968.80 <
Minor level: 2,929.73 **
Minor level: 2,851.58
Major level: 2,812.50
Minor level: 2,773.45
Minor level: 2,695.35
Major level: 2,656.30

Yesterday, closed out at 2,923.65. The objective should be to the 2,968.80 level.

I would have preferred a close above the minor 2,929.73 level. This should be resistance until it is violated. So, watch to see how the market reacts at this level.

2,905 should also offer minor support. And of course, the 2,851.60 level as well.

QQQ:

Major level: 196.88
Minor level: 196.10
Minor level: 194.53
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

The QQQ closed at 188.43. The QQQ did take out the 187.50 level as we were looking for.

The next level on the upside is 189.06. Two closes above this level and the QQQ should run up to 193.75.

But, it should offer resistance. A break under 187.50 would suggest lower prices.

IWM:

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 **
Minor level: 145.31
Major level: 143.75

The IWM closed at 150.13, clearing the major level by only 13 cents.

Support should now be at 148.44 and at 146.88.

The major averages on the daily chart are now within 30 cents of crossing into an uptrend.

TLT:

Major level: 150.00
Minor level: 148.44
Minor level: 145.31 **
Major level: 143.75
Minor level: 142.97
Minor level: 141.41
Major level: 140.63
Minor level: 139.85
Minor level: 138.28
Major level: 137.50

The TLT closed at 144.04. The 143.75 level should offer support. The TLT is pulling back from its overbought condition, but it is still above the upper band on the daily chart.

That price level 141.90. The key will be to see if the TLT can close under the upper band. As I have said in the past, a market can bounce around when it is above the upper band.

But I do think it will break under it because the last swing up was too fast and well above a 45-degree angle. I may be wrong, but the key is to just wait to see if it closes under the upper band.

140.63 should be support on the downside.

GLD:

Major level: 143.75
Minor level: 142.97
Minor level: 141.41 **
Major level: 140.63
Minor level: 139.85
Minor level: 138.28
Major level: 137.50
Minor level: 136.72
Minor level: 135.16
Major level: 134.48
Minor level: 133.60
Minor level: 132.03

The GLD closed at 141.11. The close was just above the upper band on the daily chart, which is now 140.99.

Watch to see if it closes under it today. But, it should still be support until it is violated.

140.63 is a support level. Or should be. So, if it is violated, the GLD should head lower.

XLE:

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 <
Minor level: 58.60
Minor level: 57.03
Major level: 56.25

The XLE closed at 58.38. 59.38 should be the objective and yesterday's high came to within 1.10 of it.

If 56.25 should still be a major support level. And 56.64 is minor support. And 55.47 is minor support.

If the XLE can clear 60.94 on this drive, it would help to confirm that a bottom is in.

AAPL:

Major level: 212.50
Minor level: 209.38
Minor level: 203.13
Major level: 200.00 <
Minor level: 196.88 **
Minor level: 190.63
Major level: 187.50
Minor level: 184.38
Minor level: 178.13
Major level: 175.00

Apple closed at 210.35. Apple took out the 212.50 level by 23 cents.

Apple is very close to crossing into an uptrend on its daily chart. Once this happens, it should continue higher.

206.25 should be support.

WATCH LIST:

Bullish Stocks: MLM, MKC, CCI, VMC, LOPE, PG, FISV, SHAK, WELL, MPC, MMP

Bearish Stocks: BA, ILMN, ANTM, DPZ, BIIB, TSLA, MMM, AGN, FDX, JAZZ, FFIV

Be sure to check earnings release dates.