January 10, 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.

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 $15.20
Short Jan 12- $15.50 Call @ $0.31
Premium Collected - $3.55

AMC Long at $15.27
Short January $16 Call @ $0.27
Premium Collected - $2.25

UNIT Long at $17
Short January $17.50 Call @ $0.35

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The S & P 500 continued its move up this year, closing at 2,751.29. It closed up 3.58 points on the day.

And yesterday, the S & P 500 actually traded above the next upside level, which is 2,753.93. The high for the day was 2,759.14, before selling off to close under 2,753.93.

This tells us that the S & P 500 still needs two closes above 2,753.93 for the active objective to be 2,812.50.

The main concern at the moment is that yesterday was the second consecutive day where both the S & P 500 and the VIX closed to the upside.

Actually, we could make the case that both the S & P 500 and the VIX closed to the upside for the last four days.

The VIX actually closed flat on the 5th, while the S & P 500 closed to the upside.

All this divergence tells us to be aware that a pullback is possible.

And pre open, all major markets are trading to the downside, so once again this simple divergence is working.

The question now is where should support come in?

At this point, I would not expect the S & P 500 to drop below the 2,578 level on a pullback. At least that would be the lowest level I feel it could go.

Shorter term, the 2,658 to 2,677 area should offer support.

And 2,713 is the support area from last week's weekly price bar.

On another note, the Eastman Kodak Co. (KODK) jumped 119% based on announcing that they will create a crypo currency. And pre open, it is trading almost $5 higher.

So, in two days, KODK has moved from around $3.00 to $11.70 in two days based on this announcement.

I caution you not to chase these fads, as I feel it will not end well.

Here are the Key Levels for the Markets:

$VIX:

Major level: 14.06
Minor level: 13.67
Minor level: 12.89
Major level: 12.50
Minor level: 12.11
Minor level: 11.33
Major level: 10.94 **
Minor level: 10.55
Minor level: 10.16 <
Major level: 9.38
Minor level: 8.99
Minor level: 8.20
Major level: 7.81

The VIX close at 10.08. And the VIX diverged with the S & P 500 again. They both closed higher for the day.

To move higher, the VIX will need two closes above 10.16.

Also, resistance should be at 10.94.

$SPX:

Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93 **
Major level: 2,734.40 <
Minor level: 2,724.23
Minor level: 2,705.07
Major level: 2,695.30
Minor level: 2,685.55
Minor level: 2,666.05
Major level: 2,656.30
Minor level: 2,646.53

The S & P 500 closed at 2,751.29, closing above the 2,734.40 objective. Support should now be at 2,734.40.

The market hit hit the next upside confirming level, which is 2,753.93.

To move higher, the S & P 500 will need two closes above 2,753.93.

Often, after breaking through multiple levels, the market will stall at the next upside confirming level.

Resistance should be at 2,751.50 Minor support is at 2,734.40.

QQQ:

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
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.34
Minor level: 150.78
Major level: 150.00

The QQQ closed at 162.56. Two closes above 164.06 and the new objective becomes 168.75.

156.25 should be strong support for the QQQ.

IWM:

Major level: 156.25
Minor level: 155.47
Minor level: 153.91
Major level: 153.13 <
Minor level: 152.35 **
Minor level: 150.78
Major level: 150.00
Minor level: 149.22
Minor level: 147.66
Major level: 146.88

The IWM closed at 154.82. At this point, I would expect strong support at 150. And watch to see if the IWM breaks under 153.13.

154.30 is minor support.

TLT:

Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13
Minor level: 127.35
Minor level: 125.78
Major level: 125.00
Minor level: 124.61 **
Minor level: 123.83
Major level: 123.44
Minor level: 123.05

The TLT closed at 123.95. A close today under 124.61 and the TLT should drop to 123.44.

124.61 should be resistance.

GLD:

Major level: 128.13
Minor level: 127.35
Minor level: 125.78 **
Major level: 125.00 <
Minor level: 124.22 **
Minor level: 122.66
Major level: 121.88
Minor level: 121.10
Minor level: 119.53
Major level: 118.75
Minor level: 117.96

The GLD closed at 124.37. 125 is a key level for the GLD. A straddle could be the strategy at the moment.

A failure and the GLD could drop to 112. A breakout and the GLD could run to 137.

To move lower, the GLD will need two closes under 124.22.

XLE:

Major level: 76.56
Minor level: 76.17
Minor level: 75.39 **
Major level: 75.00 <
Minor level: 74.61
Minor level: 73.83
Major level: 73.44
Minor level: 72.66
Minor level: 71.09
Major level: 70.31
Minor level: 69.92

The XLE closed at 75.23. It closed again above the major 75 level.

74.22 should be support. And 75.78 is minor resistance.

The XLE is above its upper band on the daily chart. The upper band in 75.02.

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: 84.96
Minor level: 84.55
Major level: 84.38

The FXY closed at 85.21. Watch to see if the FXY can clear 85.36.

85.06 should offer support. 85.55 should offer minor resistance.

AAPL:

Major levels for Apple are 175, 171.88, 168.75, 165.63, 162.50, and 159.38.

Apple closed at 174.33, just under the 175 level.

Two closes above 175.78 and Apple should test 178.13. 173.83 should be minor support. 172.66 should offer support.

WATCH LIST:

Bullish Stocks: AMZN, GOOGL, BIIB, LMT, HUM, DIA, BIDU, HD, FB, AMGN, SWK, LH, DE, VRTX, PANW, NSC, COL

Bearish Stocks: SLG, EPR, HCN DXCM, AIV, HTA

Be sure to check earnings release dates.