February 24, 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.

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After a one day bounce on Monday, the S & P proceeded to give back those gains and more.

And pre open, the markets are set to open with a gap to the downside.

This sets up a few likely scenarios.

The first is the fact that the S & P 500 could not take out the prior top at 1,947.20. This has bearish implications.

The second fact is that the S & P could not hit 2,000 on this drive. I had mentioned that this level was critical and if it was hit on this drive, it is possible the pullback could be over.

The most likely scenario at this point is a retest of the bottom band on the daily chart.

The bottom band is 1,843 and as I have mentioned before, once the lower band is violated, there is usually a retest of the bottom band. And the usual pattern is that the market forms a higher bottom above the band.

If the lower band is exceeded, that will tell us something as well. And what to expect.

Having said that, there are two levels to watch as support.? The first is the 1,906.30 level. The second is the 1,890 level.

At 12:00 today is our bi-monthly webinar. I hope to see you there.

Here are the key levels for the markets.

VIX:

Minor level - 29.68
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 of course spiked yesterday with the drop in the market.

I had a great question yesterday from a fellow member about interpreting the VIX in conjunction with trading the SPY. On today's webinar I will share how I do that and hope to answer this gentleman's question.

A close today above 20.31 would mean a push up to 25.

S & P 500 Cash Index:

Major level - 2,000.00
Minor level - 1,984.38
Minor level - 1,953.12 *
Major level - 1,937.50 *
Minor level - 1,921.88
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

After hitting the 1,937.50 objective, the S & P 500 sold off. It closed at 1,921.27 or 61 cents under the 1,921.88 level.

A close today under that level would mean the objective is down to 1,875.

Short term support should be at 1,906 and 1,890.? Remember, once a level is violated to the downside, it becomes resistance.

Nasd 100 (QQQ):

Major level - 106.25
Minor level - 105.46
Minor level - 103.91
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

The QQQ closed at 101.58, or under the the 102.35 level. A close today under 102.35 and the downside objective is back to 100.

100 should be major support. A violation would indicate further downside on the QQQ.

TLT:

Major level - 137.50
Minor level - 136.71
Minor level - 135.16
Major level - 134.38
Minor level - 133.60
Minor level - 132.03 *
Major level - 131.25
Minor level - 130.46
Minor level - 128.91
Major level - 128.13

The TLT managed to close above the 131.24 level yesterday, at 131.47.

Two closes above 132.03 and the TLT should retest 134.

128.13 and 131.25 should be major support for the TLT.

GLD:

Major level - 121.88
Major level - 118.75
Minor level - 117.96
Minor level - 116.41 *
Major level - 115.63 *
Minor level - 113.28
Major level - 112.50

The major 115.63 level held as strong support.? The GLD closed at 117.22.

A close today above 116.41 and the objective is to 118.75.

XLE:

Minor level - 60.16
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

55.47 is a short term level of support on the XLE.? Two closes under that level and the XLE should drop to 53.

Apple:

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

Apple did not quite reach $100 on this last drive and is selling off.

Look for a move down to the lower band, which is $90.

Watch list:
Bullish Stocks: KMB, TLT, CLX, NEE, RNR, GOLD, PM, SAFM, EW, PG, ATO

Bearish Stocks: REGN, GS, SIG, VRX, JACK, CERN, VRSK, ALNY, CERN, AIG, AGU, BG, SOHU, XL

Be sure to check earnings release dates.