May 30, 2019 - MDT Pro Tips A.M.

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 - $2.10

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

GRUB Long June 7th $64.50 Call at $2.00
GRUB Short June 7th $69.50 Call at $0.40

If you were on John's webinar yesterday, you heard me give my immediate assessment of the market.

There were two key points I made. The first was that I did not expect the S & P 500 to break under the 2,763.70 level. This is a level I wrote about yesterday.

This is what I wrote in yesterday's update ... "2,763.70 is the outer level on the downside for the S & P 500. I don't see it getting violated, but if it does, look for further selling."

As it turned out, the S & P 500 stopped at 2,766.06, or about 2.50 points above it before rallying 16.96 points into the close.

The second point I made was on the VIX.

I suggested that the key would be the 18.75 level on the VIX. If the VIX got through 18.75, the market would see more selling. If the VIX failed at that level, it should drop and help to confirm the low in the market.

As it turned out, the VIX got as high as 19.04 before pulling back to close at 17.90.

I know I get very specific when I discuss these turning points, but that is how you can get low-risk entries. And hopefully, this information has or is helping you to read the markets. And more importantly, you are taking advantage of the prognostications.

The other key price level I have been discussing is the midband on the daily chart. The midband now reads 2,776.53 and the S & P 500 actually traded below it yesterday.

With a low of 2,766.06, the S & P 500 fell about 10 points below before managing to move back above it and close above it.

The close for the day ended up at 2,783.02 or 6.49 points above the midband.

As I have been saying, the midband should offer support the first time it is tested from above, especially if the market is in an uptrend, which the S & P 500 is.

No question the midband is a key support level and if it violated, I would expect some serious selling pressure.

How low could the market go if the midband is violated?

The lower band is 2,488.21, and quite frankly, it would be the logical target if the midband does not hold.

So, it is critical to see what happens in the next few days.

The day closed out at 65% of the daily bar. This does give a slight nod to violating yesterday's high before the low.

Yesterday's high was 2,792.03 or 9 points above the close. With the S & P 500 trading 6 points higher pre open, it will only need about 3 points to take out the high.

Support from yesterday's daily bar is in the 2,779 to 2,786 area.

I did mention that I would provide an update on TSLA today and I will.

TSLA is actually starting to excite me.

As you know, it is under the lower band on the daily chart, which measures an extreme oversold condition.

And yesterday it closed slightly higher at 189.86. The lower band is 202.92, so it is about $13 under the lower band.

This would be the first objective for TSLA. And what it does at the lower band should tell us if it continues higher or not.

I am not adverse to buying under the lower band, but I do want a bit of bullish price confirmation.

A conservative set up would be to wait until the 30 minute chart crossed into an uptrend. And right now, it is still bearish.

A more aggressive entry would be after the 10 minute chart crosses into an uptrend. The 10 minute is close to crossing into an uptrend, and I will let you know when it does.

If I look at the resistance levels, I don't see TSLA dropping under 175. And the key support level is 187.50.

If TSLA can manage to rally here, I could see a run up to 250, which is about a $60 move.

At that point, I would want to be short.

There is a minor confirming line at 195.31. Two closes above 195.31 would confirm a move up to 218.75. This is another level to monitor.

A strategy I like to use when a stock gets this oversold is to simply do buy writes on the stock. That is because I don't see TSLA falling much more. It may, but I know the downside level is 175, so I would close a long if it dropped under that.

A buy write on TSLA would look like this.

Buy TSLA at roughly $188 and then sell the June 7th $187.50 call for $9.

You can keep selling calls against the position until it makes a run.

That is just my thoughts at the moment about a stock that is severely oversold.

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 Hit
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

As I mentioned above, the VIX closed yesterday at 17.90. It did hit the 18.85 level and close just under the minor 17.97 level.

This now suggests that a close today under 17.97 and the VIX should drop to 15.63.

But, minor support should be at 15.63.

As you know, as the VIX drops, the market should rise.

The upper level on the VIX is 20.31. I don't see it exceeding this level, but if it does, look for the VIX to continue higher. (And the market lower.)

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 < Hit
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

As I said above, the S & P 500 stopped about 3 points above the outside level of 2,763.70.

And it climbed back to close at 2,783.02 which was the minor level I mentioned yesterday.

For the S & P 500 to move higher, it will have to close above 2,792.98 today. So, watch this level. By the way, yesterday's high was 2,792.03 and with a bullish bias before the open, this should be cleared.

On a pullback, watch for this level to hold as support.

QQQ:

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 <
Minor level: 173.44
Minor level: 170.31
Major level: 168.75
Minor level: 167.19

The QQQ stopped at 175.09. Close enough to say the 175 target was hit.

Two closes above 176.56 and the QQQ should test 181.25.

Watch the minor 176.56 level today. It should be support if it clears it.

IWM:

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
Minor level: 154.69
Minor level: 151.56
Major level: 150.00 <
Minor level: 148.44 **

The IWM closed at 148.34. The IWM will have to close above 148.44 to move higher. So, watch this level today.

The IWM is oversold in the short term, but there will be overhead resistance at 156.

TLT:

Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13 HIT!
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: 124.61
Minor level: 123.83

The TLT closed out at 129.09. A close today above 128.91 and the TLT should test 131.25.

The TLT closed above the upper band on the daily chart, which is now 128.82.

128.91 is minor support.

GLD:

Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88
Minor level: 121.49
Minor level: 120.70
Major level: 120.31< < HIT
Minor level: 119.92
Minor level: 119.14
Major level: 118.75

The GLD closed at 120.87. Biased for a move up to 121.88.

121.88 should be resistance.

The 30 minute chart is in a downtrend. And the 60 minute chart is close to crossing into a downtrend.

XLE:

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
Minor level: 64.85
Minor level: 63.28
Major level: 62.50 <
Minor level: 61.72 **
Minor level: 60.16
Major level: 59.38 <

The XLE closed at 60.59. Watch the minor 60.16 level today. A close today above 62.50.

At this point, 60.16 is the outer support level for the XLE. If this does not hold, look for further selling.

Longer term, the major 59.38 level will be the key. If the XLE does have two closes udner 59.38, a drop to as low as 50 will be possible.

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 177.38. At this point, I expect a drop to 175.

And if Apple can hit 175, I would expect a bounce.

If Apple can hold 175, I would suggest a trade for the bounce.

WATCH LIST:

Bullish Stocks: LLL, SBAC, AMT, CME, SAGE, KMB, HSY, RACE, ROKU, ED, WELL, WING

Bearish Stocks: AMZN, GOOGL, NFLX, ADBE, GS, TSLA, FDX, NVDA, FFIV, CXO, CTXS, RH, PSX, VLO, XOM

Be sure to check earnings release dates.