February 16, 2016 - 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.

Current Positions
GOGO? Long at $19.93
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X Long at $14
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ASNA Long at $14.20
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ETE Long $14.05
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P Long $13.38
Short Jan $14 Call - $.35

SFLY - Long Feb $40 Put @ $1.90
SFLY - Long Feb $37.50 Put @ $.65

KMI Long at $14.82
KMI - Short Feb 19th - $15 call @ $.48

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Last Thursday, the S & P 500 retested the 1,812.50 level and once again it held.

From that level, the S & P 500 rallied almost 55 points in two days.

The market was due to bounce based on a couple of factors. The first of which was that it was under the
lower extreme bollinger band on the daily chart.

The second factor was that it was restesting the major 1,812.50 support level ... again.

There are a couple of scenarios I want to outline. The first is that because the S & P 500, and all the markets for that matter, traded under the bottom band on their respective daily charts, I would fully expect a retest of that level at some point.

It usually never happens where price breaks under the lower band and it does not retest that level.

The second factor we need to look at is the range movement of this rally. If the S & P can manage to hit or exceed 2,000 on this rally, it could mean that this sell off is over.

If the S & P manages to get up to only 1,938, it would mean that the bear phase is still in place.

Having said all this, assuming that Thursday's low put in a double bottom, the next top would project out to around 2,084, or about 84 points above the 2,000 level.

A rally above 2,000 on this drive would be bullish.

The weekly bar for the S & P 500 formed a hammer. Based on that price structure, I would expect support to be around 1,837.
At least that would be the area I would be looking for support to hold.

A final comment is that the NASD composite is still trading under the lower band on it's daily chart. Both the DOW and the S & P are above their lower bands.

The NASD has now become the laggard. The lower band is 4,416.47 and Friday it closed at 4,337,51.

Here are the key levels for the markets.

VIX:

Major level - 37.50
Minor level - 32.81
Major level - 31.25
Minor level - 29.68
Minor level - 26.56 *
Major level - 25.00
Minor level - 23.44
Minor level - 20.31
Major level - 18.75

The VIX closed down Friday at 25.40, or 40 cents above the 25 support level.

It will need two closes under 23.44 to move down to 18.75.

Thursday, the VIX stalled right at the upper band on the daily chart.

S & P 500 Cash Index:

Minor level - 1,890.62
Major level - 1,875.00
Minor level - 1,859.38 *
Minor level - 1,828.12
Major level - 1,812.50
Minor level - 1,796.88
Minor level - 1,765.62
Major level - 1,750.00

The S & P did manage to close above 1,828 for two days, so the objective should be to 1,875.

Watch the 1,859 level to see if it stalls out at that level.

1,843 should be support.

Nasd 100 (QQQ):

Major level - 103.13
Minor level - 102.35
Minor level - 100.78
Major level - 100.00
Minor level - 99.21
Minor level - 97.66
Major level - 96.88 *
Minor level - 96.09
Major level - 93.75
Major level - 90.63

A close today above 97.66 and the objective should be to 100. 96.88 should be support at this point.

TLT:

Major level - 137.50
Minor level - 136.71
Minor level - 132.03 *
Major level - 131.25
Minor level - 128.91 *
Major level - 128.13
Minor level - 127.34
Minor level - 125.78
Major level - 125.00

The TLT stopped at 135.25 and sold off.
It was above the upper band on the daily chart, so it should retest that level.

128.13 should be a strong level of support for the TLT.

GLD:

Major level - 121.88
Major level - 118.75
Major level - 115.63
Minor level - 113.28 *
Major level - 112.50
Minor level - 111.71
Minor level - 110.16
Major level - 109.38

The 115 area should be strong support for the GLD.

Still has not crossed into an uptrend on the daily chart, but it is close.

I am looking for a top at the beginning of March.

XLE:

Major level - 59.38
Minor level - 58.60
Minor level - 57.03 *
Major level - 56.25 *
Minor level - 54.69
Minor level - 53.19
Major level - 53.13
Minor level - 51.56
Major level - 50.00
Minor level - 43.75

Objective should be to the 56 area. 57 should act as resistance on the first move up there.

Getting some life in the XLE.

Apple:

Major levels for Apple are 112.50, 106.25, 100, 93.75, and 87.50.

Back inside the lower bands. It should bounce from here, most likely to around 100.

Watch list:
Bullish Stocks: MKC, FXE, WEC, SAFM, AWK, TSN, ED, SO, RAI

Bearish Stocks: TSLA, BWLD, ALXN, MNST, PII, BIDU, BDX, VRTX, SWK, GILD, LAD, HAR, TRIP, BABA, Q
Be sure to check earnings release dates.