December 12, 2018 – 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

OI Long Feb $19 call @ $1.70

MDR Long @ $9.31

PHM Long Dec $25.50 put @ $0.80
PHM Short Dec $24.00 put @ ($0.35)
…………………………………………………………………………..

The market opened yesterday to a 26.72 point bullish gap which, of course, the market could not hold.

After the bullish gap, the S & P 500 ran up to a high of 2,674.35 and stalled out. 

From that price level, the market proceeded to sell off for the remainder of the day.

It dropped to a low of 2,621.30, rallying back to close at 2,636.78.

The price action from yesterday was fairly predicable.  I say this because a bullish gap, when all the short term charts are bearish, is usually an opportunity to sell the market.
 
And yesterday, all the short term timeframes I look at were bearish.  Those are the 10 minute, 30 minute and 6 minute charts.

And our resistance levels were relevant once again for the day.

The high for the day was within one point of a minor resistance level which is 2,675.80.

And after it bottomed out, the market came back to recapture the minor 2,634.30 level.

This is bullish because if the S & P 500 has two closes under 2,634.30, the target to the downside would be 2,597.70.

And pre open this morning, the S & P 500 is once again trading higher.  As I write this, it is trading almost 24 points to the upside.

This projects to an open around 2,660.

This would suggest that support should be at 2,651.40.  And on the upside, minor resistance is at 2,700.20.

There is also major resistance at 2,695.30.  This the area I am looking at for a potential short in this market.

To confirm a move up to 2,695.30, the S & P 500 will need two closes above the minor 2,658.70 level.

At this point, 2,658.70 should be resistance.  But, the projected open is about 2 points above.  Watch to see if the S & P 500 can hold this level today.  If it stays above it, expect a move higher.

If the market breaks under it, I would expect resistance there. 

Earnings do continue this week.  The company reporting this week that could have the biggest impact on the market is ADBE.

ADBE reports this afternoon after the close.

Continue to monitor the levels as I mentioned above.

Here are the Key Levels for the Markets:

$VIX: 
 
Major level: 31.25
Minor level: 29.69
Minor level: 26.56
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 

The VIX closed at 21.80. It closed down 0.80 on the day.  With both the S & P 500 and the VIX closing to the downside, this created a divergence.

Usually, this signals a change in short term direction.

20.31 is a short term support level.  Watch to see if the VIX can hold this level.  If it can’t, the VIX should continue lower.

SPX: 

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 
Minor level: 2,731.90 
Minor level: 2,707.50 
Major level: 2,695.30 
Minor level: 2,683.10 
Minor level: 2,658.70 **
Major level: 2,646.50 <
Minor level: 2,634.30 ***
Minor level: 2,609.90
Major level: 2,597.70

To move higher, the S & P 500 will need two closes above 2,658.70.

With a projected gap open around 2,660, watch the level above.  And watch yesterday’s high which was 2,674.35.  This is very close to the minor 2,675.80 resistance level.

With a 30% close percentage yesterday, the odds still favor violating yesterday’s low of 2,621.30 before the high.

A violation of yesterday’s high would be significant. 

Short term charts remain bearish.
 
QQQ:  

Major level: 175.00   
Minor level: 173.44
Minor level: 170.31 
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 

The QQQ closed at 163.61.  It closed up 0.54.

The next minor level on the upside is 164.06.  Two closes above that level and the QQQ should test 168.75.

162.50 should be support for the QQQ.

I just want to point out that the daily chart for the QQQ has now crossed into a downtrend.  This now puts it in alignment with the S & P 500.  I also want to mention that the DOW is in a downtrend as well.

IWM:
 
Minor level: 151.56 
Major level: 150.00 
Minor level: 148.44 
Minor level: 145.31
Major level: 143.75 < <
Minor level: 142.19
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81
Major level: 131.25

The IWM closed at 143.45.  It closed down 0.15 on the day.  

This was the second close under the major 143.75 level.  This suggests that the IWM should head lower.  And higher levels should be resistance.

The IWM is in a downtrend on its daily chart, so consider any rally a bounce in a bear market.

TLT:  

Major level: 121.88
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
Minor level: 116.80
Minor level: 116.02 

The TLT closed at 118.88.  With the TLT trading above the 118.75 level, look for support around that level.  If 118.75 is taken out, I would expect strong support at 117.19.  If the TLT breaks under 118.75, look for a pullback.

But, the TLT is above the midband on the daily chart which is 117.76. This should be support until it is violated.

Trading as if a rate hike has been cancelled.  Buy support.

GLD:  

Major level: 121.88
Minor level: 121.10
Minor level: 119.53 **
Major level: 118.75 <
Minor level: 117.97
Minor level: 116.41 
Major level: 115.63 
Minor level: 114.85 
Minor level: 113.28 
Major level: 112.50 

The GLD closed at 117.54.  Like the TLT, the GLD will need to clear 118.75 to head higher.

A failure at 118.75 would suggest the GLD should drop.

115.63 should be support on the downside unless it is taken out.

XLE: 

Minor level: 72.66  
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

The XLE closed at 63.09.  The XLE is trying to hold the 62.50 level.  The low for the day was 62.43.

Watch for consolidation around 62.50.  If it does, I would expect a short term bounce.

Hopefully, we get a nice rally that we can short.  I expect lower lows.

FXY:

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 <
Minor level: 84.18 
Minor level: 83.79 
Major level: 83.59 

The FXY closed at 84.25.  Resistance is at 84.58.  To move higher, the FXY will need two closes above 84.58.  

Two closes under 83.98 would confirm a move down to 82.

The FXY is oversold and I do expect a bounce.

AAPL:

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
Minor level: 164.06
Major level: 162.50

Like the FXY, Apple is oversold. Finally getting a bid.  I mentioned a bounce yesterday.  Watch to see if Apple consolidates for a few days.

The key level is 162.50.  If Apple breaks under 162.50, expect Apple to head lower.

Waiting for a bit more price confirmation before suggesting a long on Apple.

WATCH LIST:

Bullish Stocks: REGN, AMT, WDAY, RH, CCI, DLR, RCI

Bearish Stocks: BA, LMT, NOC, FLT, GS, GD, RTN, ASML, NVDA, CXO, UTX, FANG, PLCE, PSX, ABC, CRI, EA, VLO

Be sure to check earnings release dates.