July 17, 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.

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The markets were relatively quiet yesterday, closing 2.88 points down for the day.

The S & P 500 closed at 2,798.43.

Yesterday was the second consecutive day of range contractions. The range for the day was only 10.32 points. And this comes after the 12.84 point range on Friday.

The daily average true range is now 23.15 points.

If we look at the ranges for the last six days, we can easily see that all six days contracted.

So where does this imply for the markets?

First off, we still have a bias that last week's high, which was 2,804.53, should be violated before the low, which was 2,768.51.

Monday's high was 2,803.71. So, last week's high was not violated.

If the market does continue to pullback, we need to look at the support levels from last week's weekly price to see if the market is bottoming around those levels.

Those key support levels should be in the 2,784 to 2,787 area.

And with both the short term 30 minute and 60 minute charts in uptrends, the best way to profit will be to isolate the end of a pullback, as opposed to trying to short at this point.

Even though the S & P 500 has failed to take out the major 2,812.50 level at this point, I am still biased to the upside.

I explained yesterday what happened that last time the market took out that level.

In looking at the resistance levels, I would expect support at the minor 2,783.20 level. This level also coincides with the support area from last week's price bar.

Pre open, the markets are trading slightly lower.

NFLX reported last night and is trading to the downside about $51 or 12.7%.

Continue to monitor the longer term levels for the market.

Here are the Key Levels for the Markets:

$VIX:

Major level: 31.25
Minor level: 29.69
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 <
Minor level: 10.94

The VIX closed at 12.73. This is 23 cents above the major 12.50 level.

The VIX would need two closes above the 14.06 level to move higher.

At this point, I would still expect resistance at 14.06 and 13.28.

11.72 is a minor support level on the downside. A break under 11.72 and the VIX should head lower.

$SPX:

Major level: 2,841.80
Minor level: 2,829.60
Minor level: 2,805.20 **
Major level: 2,793.00 <
Minor level: 2,780.78
Minor level: 2,756.33
Major level: 2,744.10
Minor level: 2,731.90
Minor level: 2,707.50
Major level: 2,695.30

Minor support should still be at 2,795.40. Objective should be back to 2,812.50

A break under 2,795.40 and support should come in at 2,783.20.

QQQ:

Major level: 181.25 <
Minor level: 179.69
Minor level: 176.56 **
Major level: 175.00 <
Minor level: 173.44
Minor level: 170.31
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50

The QQQ closed at 179.18. The target for the QQQ should still be to the 181.25 level.

Like the S & P 500, both short term charts are still bullish.

178.13 is minor support and if that level does not hold, I would expect 175.56 to.

IWM:

Major level: 171.88
Minor level: 171.10
Minor level: 169.53 **
Major level: 168.75 <
Minor level: 167.97 **
Minor level: 166.41
Major level: 165.63
Minor level: 164.85
Minor level: 163.28
Major level: 162.50

The IWM closed at 166.78. The IWM has now had two closes under 167.97, which implies a drop to 165.63. And I would expect support at that level.

Minor support is at 166.41.

Both short term charts are on uptrends, so look to buy on support.

TLT:

Major level: 125.00
Minor level: 124.61
Minor level: 123.83
Major level: 123.44 <
Minor level: 121.49
Minor level: 120.70 **
Major level: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75

The TLT closed at 122.21. The TLT is trading just above the midband on the daily chart, which is 121.25.

122.07 should be minor support. A break under this level and I would expect the TLT to continue lower.

And 121.88 should offer major support.

GLD:

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
Minor level: 119.14
Major level: 118.75
Minor level: 118.36 <
Minor level: 117.58 **
Major level: 117.19

The GLD closed at 117.55. The GLD goat as low as 117.28, which is within 10 cents of the 117.19 objective.

And a break under 117.19 would indicate the GLD will head lower.

The GLD is oversold and would have to drop under 117.19 to head lower.

XLE:

Major level: 78.13 <
Minor level: 77.35
Minor level: 75.78 **
Major level: 75.00
Minor level: 74.22
Minor level: 72.66
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
Major level: 68.75

The XLE closed at 75.38, on cent above the minor 75.39 support level.

I am looking for the 75 area to hold as support. If the XLE drops under 74.22, it should head lower.

The 60 minute chart just crossed into an uptrend, so short term momentum is shifting to the bullside.

FXY:

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 85.22. The FXY is sitting right around the major 85.16 level.

If the FXY can consolidate at this level for a few days, it could indicate a bottom is forming. Yesterday was the third day of consolidation.

The FXY is oversold. Consider an unequal straddle or strangle with a bullish bias. Email me if you don't understand the strategy.

AAPL:

Major level: 200.00
Minor level: 198.44
Minor level: 195.31
Major level: 193.75 <
Minor level: 192.19
Minor level: 189.06
Major level: 187.50
Minor level: 186.72
Minor level: 185.16
Major level: 184.38

Apple closed at 190.91. 190.63 and 189.06 should be minor support.

The objective for Apple is to the 193.75 level.

WATCH LIST:

Bullish Stocks: AMZN, GOOGL, HUN, ILMN, SPY, BIDU, BDX, FLT, PANW, FB, MA, SAGE, AMGN, ACN, CXO, WDAY, LOPE, DGX

Bearish Stocks: AVGO, MCD, AMP, KSU, MAN, BG, TSN, AMAT, MET

Be sure to check earnings release dates.