May 7, 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

UNIT Long at $17.00
Premium Collected - $0.35

SNAP Long at $14.54
Premium Collected - $1.65

TEVA Long $18.06
Premium collected - $1.10

KMI Long September $16 call @ $1.00

ADTN Long August $15 Call @ $.75
ADTN Short August $17 Call @ $.35

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On Friday, both short call positions expired. That would be the short $18.50 call on TEVA and the short $14.50 call on SNAP.

I will look to sell more calls on TEVA this week. Also, after earnings reports on SNAP and GOGO, both stocks are oversold after reporting.

After gapping down at the open on Friday, the S & P 500 dropped to a low of 2,615.32 before rallying the balance of the day.

From the low, the market trended higher all day, hitting a high of 2,670.93 before closing at 2,663.41.

The range for the day was 55.61 points. This was about 140% of the average true range, which now reads 39.14 points.

Also, Friday the market formed a bullish engulfment, which is a very strong bullish price formation. Especially after following a doji bar.

This now puts support from Friday's price bar in the 2,642 to 2,643 area.

For the week, the S & P 500 closed 6.49 points to the downside. And it closed about 12 points under the open.

On the weekly chart, the S & P 500 formed another hammer bar. This was the second consecutive week with this formation.

Based on this price bar formation, support should be in the 2,638 area. If that level does not hold, look for support at 2,629.

I do want to point out that the range for the week exceeded the average weekly range. The weekly range was 88.30 and the average true range is 78.79.

This tells us that we may see a contraction this week.

Finally, the close for the week was 77.9% of the weekly price bar. This puts the odds of violating the high before the low at almost 80%.

Earnings continue this week.

Pre open, the market is trading about 10 points to the upside. Based on this, the weekly high should be violated.

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 14.73. The objective remains down to 12.50.

The high for the day was 16.92, just 27 cents under the minor 17.19 level. This again shows how reversing under or around a resistance level on the VIX can tell you when the market should head up.

The low for the day was 10.91, just three cents under the minor 10.94 level.

Short term charts remain bearish so expect the VIX to reverse lower if the VIX does rally.

$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 closed back above the major 2,656.30 level. It will now need two closes above 2,675.83 to move higher. I do expect strong support at 2,656.30.

On the upside, I would expect minor resistance at 2,695.30.

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 164.87. 162.50 should offer major support at this point.

Minor support is at 164.06. If this level holds, I would expect a move up to 168.75.

IWM:

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
Minor level: 150.78
Major level: 150.00
Minor level: 149.22

The IWM closed at 155.73. 154.69 should offer minor support. Look for a move up to the major 156.25 level.

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 118.99. The TLT did reclaim the 118.75 level.

Watch to see if the TLT reclaims the 119.14 level. If it can, look for it to head higher.

GLD:

Major level: 131.25
Minor level: 130.47
Minor level: 128.91
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 <

The GLD closed at 124.54. The GLD will still need two closes above 125.78 to move higher.

I would expect resistance at 125. But, if the GLD can clear 125, it should head higher.

XLE:

Minor level: 76.95
Major level: 76.56
Minor level: 76.17
Minor level: 75.39
Major level: 75.00
Minor level: 74.22
Minor level: 72.66 **
Major level: 71.88 <
Minor level: 71.10
Minor level: 69.53
Major level: 68.75

The XLE closed at 73.85. The target should still be up to the 75 level.

Minor support is at 73.05.

75 is the key level.

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 87.80. This was the second close above 87.70, so the objective should be to 88.28.

87.50 should be support.

AAPL:

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

Apple closed at 183.83. Apple took out the 181.25 level. A close today above 182.81 and the objective should be to 187.50.

181.25 should offer strong support.

WATCH LIST:

Bullish Stocks: AMZN, BIDU, PANW, WYNN, MA, RHT, RACE, VMW, KEX, DXCM, LVS, OXY, HFC, DNKN

Bearish Stocks: TSLA, REGN, NTES, AVGO, CMI, ATHN, LOGM, WDC, BG, LUV, MDP, BERY, CLVS, WAGE

Be sure to check earnings release dates.