January 16, 2019 - 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

DIS Long Jan 25th $107 Call @ $3.35
DIS Long Jan 25th $107 Put @ $3.10

X Long at $20.30
X Jan 18th - $21.00 Call @ $0.50

RRC Long at $11.85
RRC Short Jan 25th - $12.00 Call @ $0.30
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The S & P 500 continued to bounce from its oversold condition.  But, we were biased for this move to continue for the reasons I outlined yesterday.

There were two key reasons I expected the market to continue higher.

The first was the fact that Monday's close percentage was 65% which gave a bias to violate Monday's high before the low.

And the second reason, which I feel was the most important, was that the S & P 500 managed to close above 2,578.10 for three consecutive days.

This suggests that this bull move could last longer than simply a bounce.  But, there is strong overhead resistance.

The main technical resistance is at the midband on the daily chart. And that level is 2,740.

At this point, I do expect a test of this level.  The question will be if the market can clear it.

The other key technical scenario from yesterday is that the S & P 500 managed to close above the midband on the 60 minute chart.

I mentioned how the S & P 500 spent 5 days trading just under the midband.  And yesterday it managed to clear this level.

That price level is 2,593.83 and the market is now about 17 points above it.  It should now act as support.

On a side note, I do want to mention this.

As I said, the S & P 500 spent 5 days trading just under the midband on its 60 minute chart.  The question at that time is this ... would it clear the midband?

What I have found is that if you scale down to a short timeframe you can get an indication of what the price will do.

For example, in this example, we had 5 days of price consolidating just under the midband on the 60 minute chart.  If you scale down to a 30 minute chart and look at the trend formation, it should give you an indication if price can take out the midband on the higher timeframe.

For the S & P 500, the 30 minute chart was bullish, so the bias was for the price to clear the midband.

And that is what happened yesterday.

To further the discussion about the 60 minute chart for the S & P 500, it is still bearish.  But, it is getting close to crossing into an uptrend.  If that can happen, this would imply further movement on the upside.

This is why I monitor this price action.

The shorter timeframes can help to determine what the market should do.  I say should do because as you know, if the price does not do as expected, this tells us something as well.

Yesterday's close percentage was 90%.  This puts the odds of taking out 2,613.08 before 2,585.10 at right around 90%.

And the support area from yesterday's daily bar is in the 2,598 to 2,600 area. 

The pre market activity is relatively flat.
 
I do want to point out that the S & P 500 has taken out last week's high of 2,597.82 yesterday.  This satisfied the close projection from last week.

Continue to monitor the levels as I mentioned above.

Here are the Key Levels for the Markets:

$VIX: 
 
Major level: 25.00 
Minor level: 24.22
Minor level: 22.66
Major level: 21.88 
Minor level: 21.10 
Minor level: 19.53 
Major level: 18.75 <
Minor level: 17.97 **
Minor level: 16.41
Major level: 15.63

The VIX closed at 18.36 for the day.  This was the first close under 18.75 in a long time.

The next level on the downside is 17.97.  Two closes under 17.97 and the VIX should drop to 15.63.

The midband on the daily chart is 17.12.  A violation of this level would also be bearish for the VIX.

SPX: 

Major level: 2,656.30 <
Minor level: 2,636.75
Minor level: 2,597.65 **
Major level: 2,578.10 <
Minor level: 2,558.58 
Minor level: 2,519.53 
Major level: 2,500.00 
Minor level: 2,484.38 
Minor level: 2,453.13 
Major level: 2,437.50  
Minor level: 2,421.88 

Yesterday was the first close above 2,597.65. This suggests that if the S & P 500 can close above 2,597.65 today, it should move up to 2,656.

At this point, support should be at 2,578.10.  On the upside, watch the 2,617 level.  A break above this level and the market should continue higher.

2,597.65 should be minor support as well.

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: 154.69 
Minor level: 151.56 
Major level: 150.00 
Minor level: 148.44 
Minor level: 145.31
Major level: 143.75

The QQQ closed at 162.38.  Yesterday's high took out 162.50 by 10 cents.

Next minor level to the upside is 164.06.  160.94 should be minor support.

The 60 minute chart is very close to crossing into an uptrend. As you know, a bullish crossover will imply higher prices to follow.

IWM:
 
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 

The IWM closed at 143.45.  To move lower, the IWM would need two closes under 142.19.  But, at this point, it should offer support.

A break above 143.75 and the IWM should head higher.

142.97 should offer minor support.  Like the QQQ, the 60 minute chart is very close to crossing into an uptrend.

TLT:  

Major level: 125.00
Minor level: 124.61
Minor level: 123.83
Major level: 123.44 
Minor level: 123.05
Minor level: 122.27 
Major level: 121.88 
Minor level: 121.49 
Minor level: 120.70
Major level: 120.31 <
Minor level: 119.92

The TLT closed at  120.04, down 0.44 on the day.  At this point, 120.31 should be resistance.  And minor resistance should be at 120.12 as well.

Biased for a drop to 119.53.

GLD:  

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: 117.97 
Minor level: 116.41 
Major level: 115.63 

The GLD closed at 121.88.  After getting slightly above the 121.88 level, the GLD dropped and closed right on the line.

Watch to see if 121.88 holds.  If it can't, I would expect a farther pullback.

123.05 should be resistance.  And support should be at 121.68.

XLE: 

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 <
Minor level: 61.72 
Minor level: 60.16 
Major level: 59.38 
Minor level: 58.60
Minor level: 57.03 
Major level: 56.25

The XLE closed at 62.08.  The XLE continues to trade around the 62.50 level.

Clearing 62.50 would be bullish.  But, at this point, it is resistance.

At this point, I would expect support at 62.

FXY:

Major level: 89.84
Minor level: 89.65
Minor level: 89.26
Major level: 89.06
Minor level: 88.87
Minor level: 88.48 **
Major level: 88.28 
Major level: 87.50 <
Major level: 86.72
Major level: 85.94 
Minor level: 85.75
Minor level: 85.36 
Major level: 85.16 
Minor level: 84.97 

The FXY closed at 87.85. It closed down 0.39 on the day.  It will need two closes above 88.48 to move higher.

Minor support is at 87.50 and 86.72.  Two closes under 86.72 and the FXY should drop to 84.

AAPL:

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: 159.38 
Minor level: 153.13 ** 
Major level: 150.00 
Minor level: 146.88 
Minor level: 140.63
Major level: 137.50

Apple is consolidating around its lows.  It closed yesterday at 153.07.  Watch the minor 153.13 level.  Two closes above it and Apple should test 162.

A break under 150 and I would expect another downleg.  If it holds as support, then a bounce would ensue.

Starting to get interested in trading a bounce.  Waiting for one more price confirmation.

WATCH LIST:

Bullish Stocks: CMG, REGN, VRTX, CRM, KMB, WIX, DG, ZEN, THS, FN, FL, CF, ROKU, CIEN

Bearish Stocks: BKNG, PODD, UN, UL, IBKR, WTW, CAG, STZ

Be sure to check earnings release dates.