March 26, 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.

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

AMC Long at $15.27
Premium Collected - $3.10
Short March 29th-$15 Call @ ($0.30)

UNIT Long at $17.00
Premium Collected - $0.35

VRX Long at $16.40
Short April 6th-$16.50 Call @ ($0.50)
Premium Collected - $0.50

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

Selling pressure certainly intensified Friday. The S & P 500 closed 55.43 points to the downside. It closed the week at 2,588.26.

This of course, blew right through our weekly downside projections and our resistance levels.

The range for the day was 71.78 points. This was about 31 points above the daily average true range, which is 40.81 points.

So, what does this tell us?

First off, it tells us to expect more selling pressure. The second factor to look at is the down to up volume.

And Friday it was 5.09. Not at the 9 to 1 level I consider a selling climax. Thursday did qualify as a selling climax with a reading of 9.52.

But as I mentioned, the last downmove had three selling climaxes before the market bounced. And with the selling pressure we are seeing, I would think we will need multiple selling climaxes to turn this market.

And Friday, the S & P 500 closed under the 200 ema on the daily chart. The 200 ema is 2,598 and Friday's close was 2,588.26.

The next technical level of support is the midband, which is 2,542.36.

Resistance from the daily bar is in the 2,617 to 2,622 area.

For the week, the S & P 500 closed at 3.4% of the weekly bar. This tells us to expect the low to be violated before the high. And the range for the week was 158.49 points.

Compared to the weekly average true range of 76.64, last week's range was over 200% of the average. This certainly qualifies the weekly price bar as a long range candle.

The 2,662 to 2,665 area should be resistance on the weekly price bar.

The question we have to address now is whether the bull market is coming to an end. Or has ended.

I say this because the S & P 500 has already moved down 3 resistance levels off the last major high. That is when the market fell just short of the 2,812.50 level.

And Friday, the market came within 10 points of the 2,578.10 level.

In bull markets, the pullbacks usually do not exceed two levels. This move has gone three levels already.

The 2,578.10 level should normally be a level where support should come in. If it is violated, the next level is 2,500 and if 2,500 holds, I would expect a bounce to no more than 2,656.

I will continue to outline the resistance levels and where I see this market heading in the future.

One other point to consider is this. The upper band on the monthly chart is 2,553.55. At this point, the S & P 500 is within 35 points of it. A close under the upper band would also be bearish.

Resistance from last week's weekly price bar should be in the 2,662 to 2,665 area.

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 24.87 yesterday, just three cents under the major 25 level.

A move above 25 would tell us that selling is not over. And as I mentioned, I am still looking for resistance at 25.

$SPX:

Major level: 2,734.40
Minor level: 2,714.88
Minor level: 2,675.83
Major level: 2,656.30
Minor level: 2,636.75
Minor level: 2,597.65
Major level: 2,578.10 <
Minor level: 2,558.58 **
Minor level: 2,519.53
Major level: 2,500.00

I mentioned the 2,646.50 level on Friday. And Friday, the S & P 500 opened at 2,646.71 and headed straight down all day.

Look for the market to test 2,578.10. The next downside level under 2,578.10 should be 2,558.58. A violation of 2,558.58 and the market should head lower.

QQQ:

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
Minor level: 160.94
Minor level: 157.81
Major level: 156.25

The QQQ closed at 158.51. A close today under 160.94 and the QQQ should drop to 156.25. And if the QQQ closes under 159.38 today, a drop to 150 is quite possible.

162.50 should be resistance.

IWM:

Major level: 156.25
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
Minor level: 150.78
Major level: 150.00 <
Minor level: 149.22
Minor level: 147.66
Major level: 146.88

The IWM closed at 150.05, just 5 cents above the major 150 level. And 150 should offer strong support. A violation of 150 and look for a drop to 146.88.

146.88 is a key level. This is because if the IWM closes under it for two days, it could drop to 138 to 140 area.

TLT:

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 TLT closed at 120.17. The high for the day was exactly the major 120.31 level. The TLT will need to move to 121.88 to consider this downtrend over.

Two closes above 120.70 would confirm a move up to 121.88. 121.09 is minor resistance.

GLD:

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: 121.87

The GLD closed at 127.61. The GLD came within 6 cents of the 128.13 objective.

129.69 is minor resistance. 127.34 should be minor support.

XLE:

Minor level: 76.95
Major level: 76.56
Minor level: 76.17
Minor level: 75.39
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 <
Minor level: 67.97
Minor level: 66.41 **
Major level: 65.63

The XLE closed at 66.77. The XLE is back under the midband. A drop back to test 65.63 seems like the most probably outcome at this point.

66.80 is a minor support level. A close today under it and it would confirm a drop to 65.63.

FXY:

Major level: 92.19
Minor level: 92.00
Minor level: 91.61 **
Major level: 91.41 <
Minor level: 91.22
Minor level: 90.83
Major level: 89.06
Minor level: 88.87
Minor level: 88.48
Major level: 88.28
Minor level: 88.09

The FXY bounced again and closed at 91.52. The FXY broke above the upper band. Showing strength.

Two closes above 91.61 and the FXY should test the 92.19 level.

AAPL:

Minor level: 178.91 <
Major level: 178.13
Minor level: 177.35
Minor level: 175.78
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

Apple closed at 164.94. A close today under 168.75 and Apple could drop to 150.

A rally to the 171 area would be an opportunity to short.

WATCH LIST:

Bullish Stocks: BURL, KSU, HLF, MPC, FSLR, APC, CLR, COP, HFC, DK, WPM, WLL, DO, CROX

Bearish Stocks: TSLA, COO, ADS, WHR, CB, CLX, ZBH, KMB, DIS, ALB, CELG, WBA, LAMR, CVS, CERN, PZZA, WAGE

Be sure to check earnings release dates.