May 23, 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

SNAP Long at $14.54
Premium Collected - $1.65

APA July $45 call @ $1.40
APA July $42.50 put @ $1.75

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Yesterday you should have added a strangle on APA. This trade gives us about one month for the stock to move. And it is based on the fact that the XLE hit the upper band on the daily chart and pulled back. Oil is overbought, but if it turns and heads back up, we are positioned for that as well.

The S & P 500 opened with about a 5 point bullish gap. The high for the day came within the first 10 minutes. The high was 2,742.24.

From that price level, the market dropped all day to close almost 9 points to the downside. The close was 2,724.44.

This is still above the minor 2,714.88 level, we would expect would hold as support.

On the upside, the minor 2,744.10 level is a resistance level and the high for the day was just under it. The S & P 500 needs to clear 2,744.10 to move higher.

But once again the VIX helps us to determine when these reverses should occur. The VIX had traded back down to its major support line of 12.50.

This always makes me concerned that a pullback is forthcoming.

And the VIX is trading right on the midband on the daily chart. The midband in 13.08. And yesterday was the ninth day that the VIX trading right at the midband.

If the VIX makes a push up off the midband, I would expect a further drop in the market. And if this level holds, a push up to the upper band is possible. The upper band is 24.91, just under the major 25 level.

But, the short term charts for the S & P 500 remain bullish, so I would expect support to hold and another bounce in the market to occur.
We should test the 2,714.88 level. If this level does not hold, look for the market to continue lower.

The support area from last week's weekly price bar is still in the 2,722 to 2,723 area. If the S & P opens under this area, it should now become resistance.

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

I do want to point out that AZO reported yesterday and probably had the largest intra day off earnings I have seen in a long time. AZO gapped up off earnings about $35. It peaked out at $710 before dropping the balance of the day to a low of $601.53.

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 13.22. The low for the day was within 27 cents of the major 12.50 level, which has been our objective.

At this point, look for a bounce in the VIX. It will need two closes above 14.06 to move up to 18.75.

Watch the minor 13.28 level today. If the VIX can clear this level, it should head higher.

$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

The S & P 500 managed to clear the 2,734.40 level, but could not hold it. It should act as resistance.

Watch the minor 2,714.88 level. If the market breaks under this level, it should then become resistance.

And 2,695.30 should still offer minor support.

Short term charts remain bullish, so wait until the market finds support to nibble on the longside.

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 168.18. 168.36 should now be a minor resistance level.

Also, watch the major 168.75 level. This level should be resistance as well.

IWM:

Major level: 165.63
Minor level: 164.85
Minor level: 163.28
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

The IWM closed at 161.76. This took out our objective of 162.50. The IWM reversed yesterday.

This is not unusual, due to the fact that the IWM had moved up 3 levels. It reversed off the 153.13 level and ran three levels to 162.50.

I would not expect a pullback to drop further than 156.25.

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 117.09. The TLT has now flatlined. We may get a bounce up to
117.97 or 118.75. But, I would expect resistance at the higher levels.

Clearing the 117.19 line indicates it should offer support. If the TLT breaks under it, look for the TLT to resume its downtrend.

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 ran to just above the upper band, which is 79.20, before selling off. The high for the day was 79.42. The close was 77.86.

The XLE is overbought short term. A pullback to the 72 to 75 area is the logical move.

FXY:

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
Minor level: 85.75
Minor level: 85.36
Major level: 85.16

The FXY closed at 86.36. On a bounce, the FXY should fail at either 86.72 or 87.50.

Ultimately, 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 187.16. Watch the major 187.50 level. If Apple cannot get back above 187.50, look for a drop to as low as 175. But, if Apple does pullback here, I would expect a retest of 187.50 before a correction sets in.

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.