June 21, 2019 – MDT Pro Tips A.M.

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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 $14.54
Total Premium Collected – $2.37
Short June 20th – $15.50 call @ $0.27

RRC Long at $11.85
Total Premium Collected $0.70
RRC Long at $9.20

RIG Long at $8.81
Premium Collected – $1.45

FEYE Long at $17.18
Total Premium Collected $0.80

AMC Long at $16.16
Total Premium Collected $0.35

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There is one position that expires today and that is the short $15.50 call on SNAP. SNAP is trading about 80 cents under the strike, so it is highly likely the option will expire worthless this afternoon.

If any adjustment needs to be made, I will send a separate email.

Now, onto the markets.

Yesterday began with a massive gap above Wednesday’s high of 17.86 points. The gap above Wednesday’s close was 23.14 points.

From there, the market ran up to a high of 2,958.05 before pulling back.

The pullback stopped at 2,931.50, which just happens to be within 25 cents of the Wednesday high.

I have written about the fact that on a bull gap, the prior day high should often act as support. And it worked out that way yesterday.

By the way, this also works in reverse on bearish gaps. Except for the fact that the low should be resistance.

After stopping at the bottom, the S & P 500 rallied back to close out the day at 2,954.18.

And for the day, the market closed at 85% of the daily average which puts the odds of taking out yesterday’s high before the low at 85%.

The main negative for the day was that the S & P 500 could not take out 2,968.80.

The high came to within 10 points of this key level.

The other negative was the fact that both the S & P 500 and the VIX closed higher.

But, the odds still favor yesterday’s high being violated before the low, so we have to consider that the major level should still be challenged.

However, a failure here should produce a sell-off. That is what we need to be aware of at the moment.

Remember that the last time the S & P 500 failed to clear 2,968.80, the market dropped 8 levels to the 2,375 level.

That was a drop from last October to the December bottom.

I am not saying that this will happen this time, I am just pointing out the facts.

The support level from yesterday’s daily bar is in the 2,945 to 2,952 area.

In scaling back to look at the weekly price bar, we see that it has a range of 70 points. And the weekly average true range is 77.36 points.

This does imply that the range for the week may be in. In other words, a violation of yesterday’s high is suspect.

2,940 is 75% of this current week price bar so far. I would look for support at this level.

Support from yesterday’s daily price bar is in the 2,923 area.

Here are the Key Levels for the Markets:

$VIX:

Major level: 21.88
Minor level: 21.10
Minor level: 19.53
Major level: 18.75
Minor level: 17.97
Minor level: 16.41 **
Major level: 15.63 <
Minor level: 14.85
Minor level: 13.28
Major level: 12.50
Minor level: 11.72

The VIX closed yesterday at 14.75. It still managed to close under the minor 14.85 level. So, the bias is still to the downside.

But, the VIX and the S & P 500 diverged yesterday which suggests that a change of direction could be coming.

13.28 is minor support and yesterday’s low came to 13.19. And yesterday’s high went to 16.03, just above the major 15.63 level.

So, both levels were tested.

Having said that, the VIX has had two closes under 14.85 which suggests it should drop to 12.50.

At the 12.50 level, a market reversal is highly probable.

SPX:

Major level: 2,968.80 <
Minor level: 2,949.25
Minor level: 2,910.15 **
Major level: 2,890.60
Minor level: 2,871.08
Minor level: 2,832.03
Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93
Major level: 2,734.40
Minor level: 2,714.88
Minor level: 2,675.83
Major level: 2,656.30

The active objective is still to the major 2,968.80 level.

At this point, minor support is at 2,900 and at 2,949. Strong support should be at 2,900.14.

I am still biased for the S & P 500 to clear the major 2,968.80 and if it can, a move up to 3,095 is possible.

Minor support is at 2,944.30.

QQQ:

Major level: 193.75
Minor level: 192.19
Minor level: 189.06 **
Major level: 187.50 < Hit
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
Minor level: 167.19

The QQQ closed at 188.85. Two closes above the minor 189.06 level and the QQQ should move up to 193.75.

However, it needs to clear the minor 189.84 level first.

Minor support should be at 189.

The QQQ did cross into an uptrend on its 60 minute chart, so this also suggests that this market will head higher.

IWM:

Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25 <
Minor level: 154.69
Minor level: 151.56 **
Major level: 150.00 <
Minor level: 148.44
Minor level: 145.31
Major level: 143.75

The IWM closed at 155.29. Yesterday’s high came to 156.22. Close enough to say that 156.25 was hit.
Now that the IWM is above the midband, it should act as support. That price level is now 154.85.

154.69 is a minor level and should hold as support on a pullback.

TLT:

Major level: 134.38
Minor level: 133.60
Minor level: 132.03 **
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00

The TLT closed out at 132.89. The objective should be up to 134.38.

The TLT continues to trade above the upper band which is 132.23.

The TLT is overbought but wait for a strong close under the upper band before shorting.

133.59 is minor resistance. And 132.42 is minor support.

GLD:

Major level: 131.25 HIT
Minor level: 130.47
Minor level: 128.91
Major level: 128.13 <
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
Minor level: 124.22
Minor level: 122.66

The GLD closed at 131.11. The GLD took out the major 131.25 level and it closed above the upper band on its daily chart.

At this point, the GLD is overbought, similar to the TLT. Wait for a close under the upper band to short. The upper band is 129.84.

129.69 is minor support. Next objective on the upside is to close above 131.25.

XLE:

Major level: 65.63
Minor level: 64.85
Minor level: 63.28
Major level: 62.50 <
Minor level: 61.72
Minor level: 60.16 **
Major level: 59.38
Minor level: 58.60
Minor level: 57.03
Major level: 56.25
Minor level: 55.47
Minor level: 53.91
Major level: 53.91

The XLE closed at 63.68. This now suggests that if the XLE can close above 63.28 today, it should test 65.63.

62.89 should offer support. And 64.06 is minor resistance.

The 60 minute chart is close to moving into an uptrend. And technical support is at 62.39.

AAPL:

Minor level: 203.13
Major level: 200.00
Minor level: 196.88
Minor level: 190.63 **
Major level: 187.50 <
Minor level: 184.38
Minor level: 178.13 **
Major level: 175.00
Minor level: 171.88
Minor level: 165.63
Major level: 162.50

Apple closed at 199.46. If Apple can close above 200, it could move another $50 higher.

196.88 should be minor support.

200 is a key level for Apple. If it does take out 200, it should move up to 250.

WATCH LIST:

Bullish Stocks: CMG, ORLY, ANTM, MCD, LIN, ACN, DECK, CB, KMB, DG, RACE, PYPL, YUM, ALL, ROKU, WING

Bearish Stocks: NFLX, DPZ, AGN, CXO, UTHR, NTAP, FIZZ, PRGO, AMTD

Be sure to check earnings release dates.