May 21, 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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So, after two consecutive closes above 2,714.88, the S & P 500 closed just under that level on Friday, when is closed at 2,712.97. For the day, it was down 7.16 points.

And the market contracted as well. For the day, the range was only 10.32 points. With an average true range of 29.17, the range Friday was about one third of the average. This of course, alerts us to an expansion to follow.

And the same situation existed for the weekly price bar. For the week, The S & P 500 had a range of 40.19 points. And the weekly average true range is 75.96.

So, the weekly range was about one half the average.

This all suggests that an expansion is forthcoming. And this morning, before the open, the S & P 500 is trading about 15 points to the upside.

This would suggest an open around 2,728 or about 6 points under the 2,734.40 level.

Friday, I mentioned that a key price to watch was 2,720.13. This was the close from Thursday. And the market opened under that level, at 2,717.35. Therefore, you would have expected resistance at 2,720.13.

And the high for the day was 2,719.50 or 63 cents under that level.

Key resistance levels from last week's weekly price bar is right around the 2,722 to 2,723 area.

The market should open just above this area. Watch to see if it holds as support on a pullback.

Wednesday we will get the FOMC meeting minutes at 2:00. And earnings continue this week. But, the number of companies reporting is slowing down.

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 13.39. 13.87 was the high Friday. This was just 20 cents under the minor 14.06 resistance level.

I do expect a retest of the 12.50 level.

If the VIX opens under the 13.67 line, I would expect resistance at that level.

$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

Watch how the S & P 500 reacts around the 2,734.40 level. If it can get above it, I would expect support at that level.

And 2,729.50 should offer minor support.

Short term charts remain bullish, so buying against support is still the most 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 167.46. 167.19 is a minor support level. Look for an open above this level for this level to hold.

If the QQQ can recoup 168.36, look for that level to offer support. Short term target is back to 170.31.

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 161.87. The high for the day came within 18 cents of the 162.50 objective.

161.33 should offer minor support. And minor resistance is at 164.06.

Buy against support.

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 reversed and closed at 117.21. The TLT is bouncing from an oversold condition.

115.63 should offer strong support. A break under that level the TLT should drop further.

Watch to see if the TLT can hold the 117.19 line.

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 122.41, closing under the minor 123.44 level. 123.44 should be resistance.

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 118 - 120 area.

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 78.11. The XLE took out the 78.13 objective. What now?

The XLE is now bouncing around the upper band on the daily chart. That level is 78.84.

If the XLE pulls back, I would expect strong support around the 75 level.

FXY:

Minor level: 88.09
Minor level: 87.70
Major level: 87.50
Minor level: 87.31
Minor level: 86.92
Major level: 86.72 **
Minor level: 86.53
Minor level: 86.14
Major level: 85.94

The FXY closed at 86.50. This was the second close under 86.72. Resistance should now be at 87.50 and 86.72.

A larger drop to the 84 to 85 area is expected. Sell against resistance.

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 186.31. Watch the major 187.50 level. If Apple cannot get back above 187.50, look for a drop to as low as 175.

Minor support should be at 186.72. Watch this level today. If it can hold this level, I would expect a bounce higher.

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

WATCH LIST:

Bullish Stocks: CMG, BA, GWW, ALGN, ILMN, COST, BLUE, AMGN, DE, HON, FANG, VRSN, EOG, VLO, SPLK, CNC, GRUB, SFLY, WAB, WIX

Bearish Stocks: CHTR, EQIX, LOGM, RCL, DTE, CHKP, SINA, ED, BCO, BG, D, PZZA

Be sure to check earnings release dates.