July 19, 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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Yesterday continued the violation of the Tuesday high, as we expected. This was because of the high close percentage on Tuesday.

And once again, the S & P 500 closed towards the upper end of its daily price bar. It closed for the day at 90% of range.

This tells us that we should expect a violation of the high before the low.

However, yesterday two factors should weigh in on the daily price action.

The first is that the thrust or breath was less than Tuesday. In other words, the range contracted. Yesterday's range was only 10.87 points. As compared with the average true range, which is now 22.36, we can see that there was a range contraction.

The second factor yesterday was that the both the market and the VIX closed higher on the day. This as you know, is a divergence and a potential warning that a top could be forming.

Finally, the S & P 500 did close above the major 2,812.50 level. The market closed almost 3 points above that level.

And we also have the minor 2,805.20 level, which the S & P 500 has now closed above for two consecutive days.

This suggests that the objective for the market should be to 2,841.80.

And I would expect the major level of 2,793 to offer support on a pullback.

So, where does this all suggest for today?

I would still expect a violation of yesterday's high before the low.

Yesterday's high was 2,816.76 and the low was 2,805.89. The support area from yesterday's daily price bar is 2,812 to 2,813.

Also, all short term timeframes remain bullish, so short term momentum is still to the upside.

Pre open, the S & P 500 is trading about 7 points lower. This projects an open around 2,809.

Watch the support levels I mentioned above.

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 12.10. Yesterday's high was 12.47 or 3 cents under the major 12.50 resistance level. And yesterday was a doji, so we need to be mindful that a reversal could happen.

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

Which as you know, implies the market continues higher.

Watch for resistance at 13.28 on the upside.

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. The S & P 500 closed above the major 2,812.50. This is the first close above that level since January 22nd.

On the upside, resistance could come in at 2,819.80.

2,801.50 is also minor support.

QQQ:

Major level: 187.50
Minor level: 185.94
Minor level: 182.81
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

The QQQ closed at 179.93. The 181.25 level is still the objective, but resistance is at 180.47.

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

178.91 is minor support. And 178.13 should now be minor support.

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 167.98. The IWM closed above the minor 167.97 by one cent.

Minor support is at 166.41.

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

The IWM needs to clear 168.75 to move higher.

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 121.49. The TLT closed exactly on the minor 121.49 level.

The TLT is also just above the midband, which is 121.26. This level should be support until it is violated.

121.29 should offer major support. A break under this level and the TLT should head lower.

GLD:

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
Minor level: 116.80
Minor level: 116.02
Major level: 115.63 **

The GLD closed at 116.31. The GLD is sitting right on the lower band on the daily chart, which is 115.80.

115.63 should offer strong support. A break under this level and the GLD continues lower.

The GLD remains oversold.

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 75.13, on cent above the major 75.00 support level.

The XLE has now consolidated between the major 75 and 78.13 levels for about 3 months.

Watch to see if the XLE can hold the 75 level.

74.22 is minor support.

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: 84.97 **
Minor level: 84.58
Major level: 84.38

The FXY closed at 84.77. This was the second close under 84.97, which now implies a drop to 84.38.

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 190.40. 190.23 should be minor support.

The objective for Apple is to the 193.75 level.

The 60 minute chart is close to crossing into an uptrend.

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.