July 7, 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 $0.32

..........................................................................................

Before I begin today's update, I need to mention that we have one open position that expires today. If you followed the alert from last Thursday, you would have bought AMD and sold the $13 call that expires today.

AMD closed yesterday just over the $13 strike price. You will receive a separate email if I suggest an adjustment. If you do not receive an email, that means I suggest you hold the position through the close.

Yesterday, the markets finally broke and had a large range sell off. We had been looking for an expansion based on two factors.

The first was that there were three consecutive days of narrow range trading. And the second was the fact that for the prior two days BOTH the S & P 500 and the VIX closed to the upside.

This is a divergence and not typical, even for one day. But, two consecutive days are even rarer.

The question now is does this put the market in jeopardy?

Quite frankly, I do think it is too early to make that assessment. I say this because, as you know, I measure the markets in terms of the resistance levels I share.

The market essentially stalled at the 2,437.50 level. And yesterday, the S & P 500 closed under the 2,421.88 downside level. This implies that if the S & P 500 closes under 2,421.88 today, it should drop to 2,375.

A drop to 2,375 would be a 'normal' pullback. The S & P could drop to the 2,312.50 level and that would also be considered a normal pullback.

A drop to 2,250 would make me concerned that the bull could be in trouble.

But, I do feel if the S & P 500 breaks under 2,375, that 2,312.50 should be strong support.

Scaling down to the shorter view of the market, 2,406 should be support and I do believe that 2,390.60 should offer strong support. At least this is a level I would not expect to be violated.

But, we should know today what direction the market should go. The market would have to recapture 2,421.88 to void the bearish scenario. This is key today.

The other factor that makes the bearish case rather tepid, is that the VIX did not spike as you would have expected. In fact, the VIX opened up and tested the upper band on the 30 minute chart as epected. And it stopped at 12.71 before it dropped.

After finding support at 11.67, it ran back up to the upper band and stalled at 13.05, before closing at 12.54.

I mentioned that resistance for the VIX should still be at the 12.50 level and that is essentially where it stopped.

The point is that for a bearish scenario to continue, I would have expected a spike well above 12.50 and that just didn't happen.

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 just above the 12.50 level. Watch the open today and if the VIX opens under 12.50, I would expect it to offer resistance.

Upper band is 12.76 and should be resistance.

$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

Key today is the 2,421.88 level. Minor levels are 2,414.10 and 2,406.
2,429 should be resistance.

If the VIX heads down, the market should head up.

QQQ:

Major level: 143.75
Minor level: 142.18
Minor level: 139.06
Major level: 137.50 <
Minor level: 135.94 ***
Minor level: 132.81
Major level: 131.25

The minor level for the QQQ is 135.94. If the QQQ closed for two days under this level, it should drop to 131.

Watch to see if it holds as support.

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 did confirm a move up to 143.75. Today, it will have to close above 139.85 for that scenario to hold.

139.06 should offer minor support. 140.63 should be minor 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 under 124.22. A close today under that level implies a drop to 121.88.

123.44 should be minor support. 124.22 should now be resistance.

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 <<

115.63 should be objective and a support level.

117.19 should 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 sold off again and closed at 64.11. 62.50 should be the objective, but minor support is at 64.06. If this level is violated, expect the XLE to drop to 62.50.

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 closed at 84.99. Objective should still be down to 84.38.

Minor resistance is 85.55. 84.77 could be minor support.

Continue to trail a stop if you followed the short strategy.

AAPL:

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

Apple did close under the 142.97 minor level. A close today under 142.97 and Apple should drop to 141.

Short term momentum remains bearish.

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