August 23, 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.

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Yesterday, the S & P 500 sold off a bit. For the day, the market closed 1.14 points to the downside. It closed at 2,861.82.

The upside objective still remains to 2,890.60. And the market is about 23 points away for the target.

If you think it, that is about one day's average true range away from the target. The daily average true range is 20.31.

But, once again yesterday had a range contraction of about one half the average.

Yesterday's range was only 11.49. So, yesterday was the third consecutive day of contractions.

We know that there will be an expansion. The only question is when?

Yesterday also formed a doji bar. The market opened at 2,860.99 and closed at 2,861.82. A doji is usually a contraction and a day where the close is approximately the open.

This price bar can warn of a change in direction, or a pause before the move continues.

The critical price level to watch for today is the close, which was 2,861.82.

Short term charts still remain bullish, so the bias is still to the upside.

I know I discussed several bearish set ups for the markets yesterday. But, the market will not drop until the VIX begins to move higher. And yesterday it sold back off closing back under 12.50.

The support area from last week's weekly price bar is in the 2,829 to 2,842 area. With the S & P 500 closing out well above this area, a pullback could be deep without affecting the bull move.

Pre open the market is relatively flat. Watch how the market reacts around yesterday's close.

Continue to monitor the longer term levels for the market.

Here are the Key Levels for the Markets:

$VIX:

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
Minor level: 7.81
Major level: 6.25

The VIX closed at 12.23. This puts the VIX back under the major 12.50 support level.

At this point, I would expect a retest of 11.72. The question is will the VIX drop under it this time?

If it does, it closes for two days under it, the VIX could retest 9.38.

13.28 should be resistance.

SPX:

Major level: 2,890.60 <
Minor level: 2,878.40
Minor level: 2,854.00 **
Major level: 2,841.80 <
Minor level: 2,829.60 **
Minor level: 2,805.20
Major level: 2,793.00
Minor level: 2,780.78
Minor level: 2,756.33
Major level: 2,744.10

Target is still up to 2,890.60. Yesterday was the second consecutive close above the minor 2,861.30 level.

Support should be at 2,855.20. If this level holds, the market should move up to 2,873.50.

Short term intra day 30 and 60 minute charts are still bullish. Technical support is at 2,848.

QQQ:

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

The QQQ closed at 181.06. This puts the QQQ to just under the 181.25 level.

At this point, support should be at 179.69. If the QQQ can clear 181.25, I would expect a move up to 184.38.

IWM:

Major level: 171.88
Minor level: 171.10
Minor level: 169.53 **
Major level: 168.75 <
Minor level: 167.97
Minor level: 166.41
Major level: 165.63
Minor level: 164.85
Minor level: 163.28
Major level: 162.50

The IWM closed at 171.18. The IWM should move up to 171.88.

Minor support should be at the 169.53 level and 170.31. 173.44 could offer resistance on the upside.

TLT:

Major level: 123.44 <
Minor level: 121.49
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

The TLT closed at 121.86. The TLT should test 123.44. And the TLT is within 1.50 points of it.

121.68 should be minor support and 122.27 minor resistance.

GLD:

Major level: 117.19
Minor level: 116.80
Minor level: 116.02
Major level: 115.63
Minor level: 114.85
Minor level: 113.28 **
Major level: 112.50 <
Minor level: 111.72
Minor level: 110.16
Major level: 109.38

It closed at 113.27. To move higher, the GLD will need two closes above 113.28. However, I would expect resistance at that level.

113.67 is strong resistance. Watch to see if the GLD reverses off of 113.28. If it does, it could drop to 109.

XLE:

Major level: 78.13
Minor level: 77.35
Minor level: 75.78
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

The XLE closed at 74.35. The objective for the XLE should be to the major 75 level. And the XLE is within 50 cents of it.

Minor support should now be at 73.83.

FXY:

Major level: 86.72 <
Minor level: 86.53
Minor level: 86.14 **
Major level: 85.94
Minor level: 85.75
Minor level: 85.36
Major level: 85.16
Minor level: 84.97

The FXY closed at 86.62. The FXY should test 86.72 and if it clears this level, it should head higher.

86.33 should offer support.

AAPL:

Major level: 225.00
Minor level: 221.88
Minor level: 215.63
Major level: 212.50 <
Minor level: 209.38
Minor level: 203.13
Major level: 200.00

Apple closed at 215.05. Apple will still need two closes above 215.63 to move up to 225.

214.06 is minor support. Watch to see if Apple holds this level. If it can't, then a test of 212.50 is possible.

WATCH LIST:

Bullish Stocks: CMG, GWW, HUM, SPY, UNH, BDX, FDX, AAPL, CTAS, AMGN, CME, AAP, RH, WDAY, V, DXCM, SODA, UHS, VRSK, LLY, AXP

Bearish Stocks: AVGO, NTES, STZ, BABA, ALXN, ALNY, FMC, XEC, DY, SINA, CTRP, WGO, OSTK, TUP

Be sure to check earnings release dates.