July 3, 2017 - 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

DYN Long at $12.55
Premium Collected $0.48

APA Long Oct $47.50 Call at $3.45
APA Short Oct $52.50 Call at $1.10

AMD Long at $12.77
AMD Short July 7th-$13 Call at $.32

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Last week ended with all major markets closing to the downside. The S & P 500 was down 14.89 points for the week. The DOW closed down 45.13 points.

The tech heavy NASD market saw the largest selling. The NASD composite was down 124.83 points for the week. It was down 1.99% for the week. And the QQQ was down 3.60 points or 2.55%.

Considering the losses for the S & P and the DOW were under 1% for the week, the major losses from the NASD market seem a lot larger.

And quite frankly, with the moves that some of these tech stocks have made, you would expect that would be the case.

Take NVDA for example. NVDA traded for only $24.46 in February of last week. It hit a high of $168.50 on June 9th. That is a gain of almost 600% in a year and one half.

EBIX ran from $29 to a high of $65 during the same time period. That is over a 100% gain.

CRUS traded for only $25 last February. It peaked at $72 on June 9th. That is a gain of almost 200%

The point is that the larger the moves, the larger the pullbacks.

I remember writing a special report back in August of 2015. In that report, I mentioned how you want to take a look at the sector that had the largest run and if the market pulledback, the sell off could be rather substantial.

At that time, the sector that had made the largest run were the biotechs and the pharmaceuticals.

The IBB went from $56.39 in 2008 to $400 in 2015. That was a gain of over 600%.

REGN topped out at $605.93 in July 2015. After topping out, it dropped to a low of $325 in October of 2016.

That is a correction of almost 50%.

The most incredible move, both up and down was on the stock we just sold, VRX.

VRX bottomed at $5.70 at the end of 2008. It ran all the way up to $263.81 in August of 2015. From there it dropped to a low of $8.31 on April 24th of this year.

And speaking of VRX, you should have been assigned on the calls on Friday. The gain ended up around 20%, however with two rounds of calls sold against it, the total return was almost 26%.

I decided to let the calls be assigned because the time premium to roll the calls forward for two weeks was only 40 cents. If we could have collected 60 cents or a bit more, I would have suggested that. 20 cents per week for time premium was not worth the risk.

Pre open, it appears that the markets should open with a bullish bias.

Remember, today is only a half day session, with the markets closing at 1:00 EST. And tomorrow, the markets will close all day for the July 4th holiday.

Friday, we will get the non farm payroll at 8:30 EST.

Continue to follow the resistance levels.

Here are the Key Levels for the Markets:

$VIX:

Minor level: 14.45
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: 9.77
Major level: 9.38

The VIX closed at 11.18 on Friday. 11.72 is a minor resistance level and if the VIX closes under 11.72 today, it would indicate it could drop to 9.38. The VIX should open lower and if it does, I would expect resistance at 11.72.

With a spike above the upper band on the short term charts, I would expect restest of the upper band at some point.

$SPX:

Major level: 2,500.00
Minor level: 2,484.38
Minor level: 2,453.12
Major level: 2,437.50
Minor level: 2,421.88 <
Minor level: 2,390.62
Major level: 2,375.00
Minor level: 2,359.38
Minor level: 2,328.12
Major level: 2,312.50

The S & P 500 closed back above the 2,421.88 level. 2,437.50 should be resistance.

Minor support is 2,414.10. And 2,429.70 is also a key short term level for today, again. If the market opens above it, look for it to act as support.

QQQ:

Major level: 146.87
Minor level: 146.09
Minor level: 144.53
Major level: 143.75
Minor level: 142.97
Minor level: 141.41
Major level: 140.63
Minor level: 139.85
Minor level: 138.28
Major level: 137.50 <
Minor level: 136.72

The QQQ closed again, just above the 137.50 level. This is now the second consecutive day where it closes just above that support level.

The minor level to the downside is 136.72. Two closes under that level and the QQQ could drop to 134. On the upside, the QQQ will need two closes above 139.85.

IWM:

Major level: 143.75
Minor level: 142.97
Minor level: 141.41
Major level: 140.63 <
Minor level: 139.85 **
Minor level: 138.28
Major level: 137.50
Minor level: 136.72
Minor level: 135.16

The IWM closed back above the major 140.63 level, at 140.92. 140.63 should continue to offer support. 141.80 could offer some resistance.

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: 124.22
Minor level: 122.66
Major level: 121.88

The TLT closed just above the 125 level, at 125.12. Minor resistance is at 125.78.

Minor support is at 124.61. I would not expect the TLT to break under 124.61, but if it does, it will head lower.

GLD:

Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88
Minor level: 120.32
Minor level: 119.53 ***
Major level: 118.75 <
Minor level: 117.97 ***
Minor level: 116.41
Major level: 115.63

The GLD closed just under 118.75, at 118.02. 117.58 is a minor support level. If the GLD breaks under that level, look for it to head lower.

To move to 115, the GLD will need two closes under 117.97. 118.75 should now be resistance.

XLE:

Minor level: 69.53
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

The XLE closed at 64.92. Minor support should be at 64.84 and 64.65. Watch to see if these levels hold today.

The XLE has struggled to get to 65.63, which should be the objective.

FXY:

Minor level: 87.89
Major level: 87.50
Minor level: 87.11
Minor level: 86.33 <
Major level: 85.94 **
Minor level: 85.55
Minor level: 84.77
Major level: 84.38
Minor level: 83.60
Minor level: 83.20
Major level: 82.81

The FXY close two cents under 85.55. This now implies if the FXY can close under 85.55 today, it should drop to 84.

84.96 should be support. 85.94 should now be resistance.

AAPL:

Major levels for Apple are 162.50, 156.25, 150, 143.75, and 137.50

143.75 should continue to offer support. Apple would need to close under 142.97 to drop to 140.

Short term momentum is still bearish, so it should bounce for a bit before headning up.

WATCH LIST:

Bullish Stocks: HUM, GS, FDX, CMI, WBC, CME, MCO, DGX, TSO, WAB, JPM, STT, NKE, HIG, DAL

Bearish Stocks: AZO, ORLY, JACK, GOLD, PZZA, QCOM, AMBA, SIMO, BGS, ACIA, AMC

Be sure to check earnings release dates.