January 22, 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
Premium Collected - $3.55

AMC Long at $15.27
Premium Collected - $2.25

UNIT Long at $17
Premium Collected - $0.35

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Both short call positions expired on Friday and profits from selling those positions were booked.

I will be looking to sell more calls this week.

Now onto the markets.

For the week, the S & P 500 closed 24.06 points to the upside. The S & P closed at 2,810.30.

The close for the week was also the high for the week. This means that the S & P 500 is now within 2.20 points of the objective.

Because of the high close percentage, it sets up a scenario where the odds favor a violation of the high for the week before a violation of the low.

Support from last week's weekly price bar is wide. Support is around 2,805 and 2,789.

Friday, the S & P 500 closed up 12.27 points. The support area from Friday's daily price bar is in the 2,804 to 2,806 area.

The close was above the upper band on the daily chart, which is now 2,786.85. For any major pullback to occur, I would expect a close back inside the upper band.

The major negative at the moment is that for the past two weeks, both the S & P 500 and the VIX have closed to the upside. This is a divergence and when it happens on a weekly timeframe, it is usually stronger than a daily chart.

Just as a point of reference, the last time this happened was on 8/29/14 and 9/5/14.

When it happened back then, it began a pullback of around 200 points.

It shows you are rare this set up is. And if history gives us any clues, we need to be mindful of what happened in the past.

Pre open, the S & P 500 is trading about 1.50 points to the downside.

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 sold off and closed at 11.27. The high for the day was 12.33, just under the 12.50 level, which we expected should act as resistance.

A close today under 12.11 and the VIX should drop to 10.94.

10.94 could offer support.

$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 is flirting with the 2,812.50 objective. And yesterday's high was within 2 points of the objective.

2,804 is a minor support level. And a close today above 2,804 and the S & P could test 2,822.30.

2,797 should also offer support.

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

The QQQ closed at 166.34. The objective should be to 168.75.

The 165.63 level should now act as support. And minor resistance is at 166.41.

IWM:

Major level: 162.50
Minor level: 161.72
Minor level: 160.16
Major level: 159.38
Minor level: 158.60
Minor level: 157.03 **
Major level: 156.25
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.35

The IWM closed at 158.60. At this point, the major 156.25 level should offer support. The low for Friday was 156.55, just 30 cents above the support level.

157.81 should be support. Target is still to 159.38.

TLT:

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 **
Minor level: 122.27
Major level: 121.88

The TLT closed at 123.06. We expected resistance at 125 and the TLT got as high as 125.64 before selling off.

The scenario now is if the TLT can close two days under 123.05, it should drop to 121.88.

Also, the TLT closed under the 123.44 major level. A close today under 123.44 and the TLT could drop to 120, and possibly 118.

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

The GLD closed at 126.42. I am still biased for a test of 128.13. And 125 should also offer support.

The GLD is overbought short term. Watch to see if if can clear 128.13. If it can't, it may bounce around for a while.

XLE:

Major level: 78.13 <
Minor level: 77.74
Minor level: 76.95 **
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

The XLE closed at 76.38. The objective is for a test of 78.13.

A close today under 77.74 and the XLE should test 75. 75 should be strong support.

76.17 is a minor support level.

FXY:

Major level: 87.50
Minor level: 87.31
Minor level: 86.92
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

The FXY closed at 86.64. Friday's high was 86.82, so it did take out the 86.72 level.

86.52 is a minor support level. And I would not expect the FXY to fall under 86.13.

AAPL:

Major levels for Apple are 178.13, 175, 171.88, 168.75, 165.63, and 162.50.

Apple closed at 178.46, just above the 178.13 support level. If Apple breaks under 178.13, I would expect support at 176.56.

Short term momentum has shifted to the upside.

WATCH LIST:

Bullish Stocks: AMZN, GOOGL, SHW, TSLA, BA, NOC, HUM, FDX, ALGN, GD, RTN, ADBE, CMI, URI, AMGN, AAPL, DE, CAT, MA

Bearish Stocks: SLG, KRC, TSRO, HCN, NUVA, DISH, AIV, BKH

Be sure to check earnings release dates.