August 8, 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 continued to tick up to close at 2,858.45. It was up 8.05 for the day. The range for the day was only 7.71 points.

The daily average true range now sits at 20.90. So, yesterday's range was one third of the average.

This or course, foretells of an expansion to follow. At some point.

The close percentage was only 34%. This puts the odds of the low being violated before the high at around 70%.

Having said that, the yesterday was the first close above 2,854.00. For a bearish move to ensue, the S & P 500 would have to close under 2,854.

This is because if the S & P 500 closes above 2,854 today, the upside objective becomes 2,890.60.

And the VIX dropped to within one cent of the level we were looking for, which was 10.94. It closed the day at 10.95.

The question now will be this ... can the VIX close under 10.94 for two days?

This is the key at the moment.

If it can close under 10.94, it would indicate a drop to all time lows. And quite frankly, that would be unprecedented.

Combining these facts, should allow us to determine when to lessen up on long positions.

But with the short term 30 minute and 60 minute charts still bullish, I would still expect a rally if the market does pullback.

The support level from yesterday's daily bar is in the 2,857 to 2,860 area.

Pre open, the S & P 500 is trading about 4 points lower.

Support from last week's weekly price bar is in the 2,818 to 2,830 area.

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 10.94. This VIX did test 10.94, as expected. Now the question is ... can it close under it?

Two closes under 10.94 implies a move lower.

At this point, I would still expect resistance at 12.50. And 9.38 should offer support.

Also, minor support is at 10.55.

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

The S & P 500 had its first close above 2,854. A close today above it implies a move up to 2,890.60.

Clearing 2,854 and closing above again would be bullish. But, a failure here could lead to a pullback.

2,849.10 is a minor support level.

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 181.80. The QQQ finally took out the 181.25 objective.

181.25 is a key level. A close today above it, and the QQQ could run all the way up to 200.

180.47 should be a minor support level. And 182.81 could offer some resistance on the upside.

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 167.72. A close today above 166.41 and the IWM should test 168.75.

167.19 should be minor support. 170.31 could offer minor resistance on the upside.

And 165.63 should be major support.

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 118.67. The TLT closed back under the major 118.75 level.

To move lower, the TLT will need two closes under 118.36.

118.55 is a minor support level. A break under this level and I would expect the TLT to continue lower.

GLD:

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
Minor level: 114.85 **
Minor level: 113.28
Major level: 112.50 <

The GLD closed at 114.59. I do expect a test of 112.50, but a bounce could happen first.

114.84 should be resistance. And at 115.63. Minor support is at 113.28.

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 76.08. This now implies that if the XLE can close above 75.78 today, it should test 78.13.

75.78 is minor support. If the XLE can clear 76.17, I would expect it to move up to 78.

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
Minor level: 84.58
Major level: 84.38

The FXY closed at 85.87. 85.84 should be minor support. A drop under this level and the FXY could drop to 85.55.

If the FXY can clear 86.13, it should be heading higher.

AAPL:

Major level: 212.50
Minor level: 211.00
Minor level: 208.00 **
Major level: 206.25
Minor level: 204.88
Minor level: 201.63
Major level: 200.00
Minor level: 198.44
Minor level: 195.31
Major level: 193.75

Apple continued higher and closed at 207.11, down 1.96 on the day.

209.38 is a resistance level. If Apple cannot clear this level, a pullback should be forthcoming.

Upper band on the daily chart is 205.73. A close under this extreme level and Apple should pullback.

High risk to go long here.

WATCH LIST:

Bullish Stocks: SPY, COST, AAPL, ASML, UNP, PAYC, AAP, DXCM, KLAC, JPM, SODA, WST, MSFT

Bearish Stocks: BIDU, STZ, WAT, BABA, URI, CBOE, ALB, ALNY, SINA, TSN, AIG

Be sure to check earnings release dates.