May 17, 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, the S & P 500 managed to recoup the 2,714.88 level, closing at 2,722.46.  For the day, the market was up 11.01 points.

But, yesterday I mentioned that I felt the market would recoup the 2,714.88 level. And I discussed this on yesterday's webinar as well.

One of the reasons why I was biased for the market to close higher was the fact that the S & P 500 had cleared the 2,734.40 level and pulled back.  And usually the downside level acts as support on a pullback.

That and the fact that both short term intra day charts are bullish. So, buying against support is still the viable strategy.

Of course, the VIX is the indicator that should help us to determine if the market should reverse to the upside.  After stopping just above the 12.50 level, we were looking for resistance at higher levels.  15.63 was a resistance level and the VIX stalled out at 15.01 on Tuesday.

Then yesterday's high came to 14.04, just two cents under the 14.06 level.

We were expecting the bounce in the VIX off the 12.50 level and resistance to come in at higher levels.

You might be saying who cares?  That is yesterday's news.  I only care about what should happen today.

And yes, all that is true, but by learning how to read the VIX and having an idea where it is trading and what it should do, will give you a framework to assess the market.  This will help to lock in profits and when it maybe safe to enter again.

For example, when the VIX failed on May 3rd, just under the 18.75 level, it was time to enter the market.  The S & P 500 was right at the lower band on its 30 minute chart at that time, therefore allowing a relatively low risk entry.

And when the VIX stopped at 12.50 on the 11th, it was time to book profits from the ling side.

I don't necessarily advocate the short trade at that point and on yesterday's webinar I explain why not.  I suggest you listen to the webinar and downloading the powerpoint.  You can access in the members area.

Support from yesterday's daily price bar is in the 2,717 to 2,720 area.

And support from last week's weekly bar should still be in the 2,694 to 2,698 area.

Pre open the futures are trading to the downside about 5.50 points.

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 13.46.  The VIX could close above 14.06, so it would still ened two closes above this level to move up to 18.75.

A minor support level is at 13.28.  Watch to see how the VIX reacts at this level.  If it holds as support, then the VIX should bounce a bit before breaking under it.  A break under it and the VIX should head lower.

Minor resistance is at 14.84.

$SPX: 

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 
Minor level: 2,636.75 
Minor level: 2,597.65
Major level: 2,578.10 
Minor level: 2,558.58 

Yesterday, the S & P 500 recouped the 2,714.88 level.  This level should act as support.  

2,702.60 is a minor support level, along with 2,714.88.

Short term charts remain bullish, so buying against support is still the viable strategy.

QQQ:  

Major level: 175.00 <
Minor level: 171.88
Minor level: 165.63 **
Major level: 162.50 
Minor level: 159.38 
Minor level: 153.13 
Major level: 150.00  
Minor level: 146.88
Minor level: 140.63
Major level: 137.50

The QQQ closed at 168.98.  This is back above the 168.75 level.  168.36 is a minro support level.

A break under 168.36 and the QQQ could bounce before heading up.

IWM:

Major level: 162.50
Minor level: 161.72
Minor level: 160.16
Major level: 159.38 
Minor level: 158.60
Minor level: 157.03 **
Major level: 156.25 <
Minor level: 155.47 **
Minor level: 153.91 
Major level: 153.13 
Minor level: 152.35

The IWM closed at 160.92.  A close today above 160.16 and the objective should be to 162.50.

159.38 should offer minor support.  And minor resistance is at 161.72. 

TLT:  

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

The TLT closed at 116.80.  The TLT closed exactly on the minor level.  It still needs two closes under 116.80 to drop to 115.63.

117.19 is minor resistance.  Trading from the short side is still the best way to profit.

GLD:  

Major level: 128.13 
Minor level: 127.35 
Minor level: 125.78 
Major level: 125.00 
Minor level: 124.61 
Minor level: 123.83
Major level: 123.44 <
Minor level: 123.05 **
Minor level: 122.27
Major level: 121.88 <
Minor level: 121.49
Minor level: 120.70
Major level: 120.31

The GLD closed 122.29, closing under the minor 123.44 level. 

121.88 should be the objective.  Higher levels should now offer resistance. Look for resistance at 123.44 or 125.  Downside objective should be to 1118 - 120.

XLE: 

Major level: 81.25 <<<
Minor level: 80.47
Minor level: 78.91
Major level: 78.13 <
Minor level: 77.35
Minor level: 75.78 **
Major level: 75.00  
Minor level: 74.22 
Minor level: 72.66 

The XLE closed at 77.55.  The objective is still to 78.13.  And the XLE is within 53 cents of the objective. 

The XLE is getting close to the upper band on its daily chart.  That level is 78.47.

77.34 is minor support.

FXY:

Minor level: 89.26
Major level: 89.06 
Minor level: 88.87
Minor level: 88.48
Major level: 88.28 
Minor level: 88.09
Minor level: 87.70 
Major level: 87.50 <
Minor level: 87.31 **
Minor level: 86.92
Major level: 86.72

The FXY closed at 86.79.  It did break under the midband, which should now be resistance.  That level is 86.96.  

The FXY is approaching a major level.  And that is 86.72.  If the FXY has two closes under 86.72, it could retest the 84 area.

AAPL:

Major level: 193.75
Minor level: 192.19
Minor level: 189.06
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 

Apple closed at 188.18.  I expected another rally and Apple is now back above the major 187.50 level.

Minor support should be at 186.72.  Price did retest the 187.50 level.

Both short term charts, the 30 & 60 minute remain bullish.

WATCH LIST:

Bullish Stocks: AMZN, GOOGL, BA, GWW, ALGN, BIDU, NVDA, ILMN, ADBE, PAN, BABA, AAPL, BLUE, RHT, CAT, ACN, ADSK, CR, CVX

Bearish Stocks: CHTR, DTE, THO, BUD, CELG, AEP, D, UAL, PZZA, LB, JD

Be sure to check earnings release dates.

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