May 31, 2019 - MDT Pro Tips A.M.

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Today, of course, closes out the month of May. And as it is shaping up, this will be the first bearish monthly close since December. As of yesterday, the S & P 500 is down 157 points or 5.33%.

The most notable bearish factor is that it will close under the upper band on the monthly chart. The upper band is 2,867.77.

With yesterday closing at 2,788.86, the S & P 500 is almost 79 points under the upper band.

In other words, the S & P 500 would have to rally over 79 points today to recoup the upper band. Is this possible?

I doubt it. Especially considering that the S & P 500 is trading about 32 points lower before the open.

And speaking of bollinger bands, yesterday the S & P 500 was clinging to the midband on the daily chart. That price level is 2,776 and yesterday's low came to 2,776.74, before closing about 12 points above it.

With a lower open today, the market will break under the midband. This will now suggest that the midband will be resistance.

And that a test of the lower band is possible. The lower band now reads 2,488.61.

So, at this point, the market could drop almost 300 points to retest the lower band.

Regardless of whether the market actually drops all the way to the lower band or not, it all adds up to a scenario that does not bode well for the market.

With the projected lower open, the S & P 500 should open about 12 points above the 2,734 support line. At this point, it should be support. If it can't hold and the S & P 500 drops to 2,656, this would confirm to me that a major top is in.

I say this because a drop to 2,734 would be a two-level drop from the last pivot high. A drop to 2,656 would be a three-level drop.

A two-level drop is a normal pullback in a bull market.

I would expect that we should know this answer within a few days.

I will update you on the monthly chart next week and certainly show the monthly charts on next week's webinar.

In closing, the situation is shaping up to be rather bearish. Or at least a warning that trading to the short side will be the best way to profit.

I don't see any of the usual signs that a bottom is imminent.

What I typically look for is a selling climax where the down to up volume exceeds 9 to 1.

And the sentiment indicators reach oversold levels.

As an example, the bullish percent index now reads 53.6%. When this indicator falls under 20%, it signals it being oversold.

For a point of reference, it read 11% on December 26th, which turned out to be the bottom before this move.

In closing, I want to mention that the resistance level from yesterday's daily bar is around 2,788.

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

The VIX closed yesterday at 17.30. Yesterday's high was 18.11 or 14 cents above the minor 17.97 level.

18.75 should still be resistance. And if the VIX breaks through 20.31, it should head higher.

No doubt the VIX opens higher. The question is what level will open.

If it continues higher, expect more selling after the open. Watch to see if it reverses down and if it does, the market should bounce.

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

The S & P 500 projects to open around 2,757 this morning, about 31 points lower.

This puts the S & P 500 right at the major 2,656 level. If it continues lower, look for that level to offer resistance.

The other minor level to watch is 2,763. This should be resistance as well.

The lower projected open would put the S & P 500 under the lower band on the 60 minute chart. So, a bounce today is possible. the lower band is 2,767.

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 176.77. Watch where the QQQ opens. An open below 175 would suggest it is resistance.

Also, 178 should be resistance.

The midband on the daily chart is 174. A violation would be bearish.

IWM:

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 **
Minor level: 145.31
Major level: 143.75

The IWM closed at 147.93. Look for a move down to 143.75.

143.75 is a major level. If the IWM can't hold 143.75, a drop to 125 is possible.

The lower band on the 60 minute chart is 147.29. Most likely the IWM will open under it.

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 130.20. Look for a move to 131.25.

The TLT closed above the upper band on the daily chart, which is now 129.04.

128.13 is now 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 121.69. The GLD is within reach of the 121.88 target.

121.88 should be resistance. So, if the GLD clears 121.88, look for a move to 123.44.

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 59.82. Watch the minor 60.16 level today. A close today above 62.50.

The XLE is close to a major level.

Longer term the major 59.38 level will be the key. If the XLE does have two closes under 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 178.30. 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.