August 9, 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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The S & P 500 was relatively flat yesterday. For the day, it closed down .75 points, at 2,857.70.

And yesterday was the second consecutive day that the range contracted. The range for the day was only 9.35 points. Compared with the daily average true range of 20.07, you can see that yesterday's range was about one half the average.

So, with two consecutive contractions, we can be assured of one thing.

And that is we should see an expansion ... at some point. If does not necessarily mean it will happen today. But it puts us on alert that one should be coming.

And for the day, the S & P 500 closed at 49% of the daily bar.

So, the close percentage tells us there an equal chance of the high or low being violated first. Not very helpful.

But, we should monitor yesterday's close of 2,857.70.

This should be a key level for the day, and one to watch.

There were two keys facts yesterday. The first is that yesterday was the second consecutive close above the 2,854.00 level.

This puts the upside objective to 2,890.60.

The second fact was that the VIX closed at 10.85 and for the second consecutive day, the VIX closed under 10.94. The original close on Tuesday was actually right on the 10.94 line.

They changed the close to 10.93.

Of course, one cent may not seem like a big deal to the average market participant, but to us it is.

This is because we now have had two closes under the minor 10.94 level, which means the VIX should continue lower.

This adds further credence to the upside objective for the S & P 500.

Also, the short term intra day 30 & 60 minute charts still remain bullish, so short term momentum is still to the upside.

Pre open, the S & P 500 is trading about 3 points higher. Watch yesterday's close if the market pulls back.

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 10.85. As I said above, the VIX now has had two closes under the 10.94 level. Target should be to 6.25, but 9.38 should be major support.

Minor support is at 10.16. A break under 10.16 and the VIX should head lower. 11.72 is 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 up to 2,890.60.

2,846.70 is a minor support level. And 2,849.10 should offer support.

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 182.08. This was the second close above the 181.25 objective.

181.25 should be support. And 181.64 is minor support.

As I said yesterday, longer term a move up to 200 is quite possible.

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 167.57. Objective should be to 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 118.79. The TLT closed just above 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.

The TLT is oversold.

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 114.91. Yesterday was the first close above 114.85. I'm looking for a move up to 115.63, before the GLD heads to 112.50.

114.45 is minor support.

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 75.53. This XLE could not close above 75.78, so it would still need two closes above 75.78 to move higher.

75 should still be support, until it is violated.

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 86.18. 85.84 should be minor support. A drop under this level and the FXY could drop to 85.55.

A close today above 86.14 and the FXY should test 86.72.

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 207.25. A test of 206.25 is possible, but short term momentum is still bullish.

Buying against support is still the best strategy, but watch 206.31, which is the upper band.

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.