November 10, 2017 - 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 $15.20
Premium Collected - $2.79
Short Nov 10th - $15.50 call @ ($0.96)

AMC Long at $15.27
Premium Collected - $0.98
Short Nov $15 call @ (0.55)

THC Long at $14.63
Premium Collected - $1.95
Short Nov 24th - $14.50 call @ ($0.35)

 

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We have one position that expires today and that is the short $15.50 call on SNAP. With the sell off after earnings, this call should expire worthless today.

Just a quick comment on SNAP. This shows why I like to sell high IV options going into earnings. We always keep the premium. Buying those calls would not have been a great bet.

The price action after earnings was of course, not what we wanted, but the volume on the day after earnings was most likely a selling climax. And the fact that yesterday did not trade below the low of the climax day was a very good sign.

In addition, the stock is sitting right on its lower extreme bollinger band on both the 30 & 60 minute charts. I do expect a bounce based on this extreme oversold condition. On a bounce I will look to sell more calls.

Now onto the markets.

If you were on John's webinar Wednesday, then you heard me say that the impetus for a pullback will most likely come out of Washington. And that it could be from a delay in the tax reform.

And that is exactly what happened yesterday.

The market sold off based on news coming out of Washington that corporate tax relief could be delayed one year.

The question for us is this. Could we have anticipated the sell off? Another way to ask this question is ... could we predict that the market would sell off?

To a certain degree we can predict the turning point.

Here is why.

We know the S & P 500 broke the major 2,500 level and that the next upside confirming level is 2,597.65.

Oftentimes, the market will stall out at the next upside confirming line.

On Tuesday, the S & P 500 hit a high of 2,597.02, just 63 cents under the line.

Wednesday's high was 2,595.47 or about 2 points under the level.

Then yesterday the market gapped down and sold off to 2,566.33 before mounting a rally to close at 2,584.62.

Whats interesting about the close is that the S & P 500 managed to close above the major 2,578.10 level.

The market should open lower again today. Watch for support at the lower support levels.

By the way, the sell off against the 2,597.65 level also happened in June against the 2,453.13 level. That happened after the S & P 500 took out the major 2,437.50 level.

Continue to follow the resistance levels.

Here are the Key Levels for the Markets:

$VIX:

Major level: 12.50
Minor level: 12.11
Minor level: 11.33
Major level: 10.94
Minor level: 10.55
Minor level: 10.16 **
Major level: 9.38 <
Minor level: 8.99
Minor level: 8.20
Major level: 7.81 <

The VIX hit a high of 12.16 before moving down to close at 10.50.

Watch for resistance at 10.94. A close above 10.94 and the VIX should test 12.50.

Minor support is at 9.38.

$SPX:

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
Minor level: 2,519.53
Major level: 2,500.00
Minor level: 2,484.3

Watch for support at 2,574.50 and 2,580.60.

2,575 should be a key level for today. Watch to see if it holds.

QQQ:

Major level: 156.25
Minor level: 155.47
Minor level: 153.91 **
Major level: 153.13 < Hit
Minor level: 152.35
Minor level: 150.78
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75

The QQQ closed at 153.69. 152.34 should be minor support.

And 153.13 should continue to be support.

IWM:

Minor level: 150.78
Major level: 150.00 <
Minor level: 149.22
Minor level: 147.66 ***
Major level: 146.88
Minor level: 145.32
Minor level: 144.53
Major level: 143.75
Minor level: 142.97

The IWM closed at 146.68, 20 cents under the major 146.88 level.

146.09 is a minor support level that should not be violated. Two closes under 146.09 and the IWM should drop to 143.75.

TLT:

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

The TLT closed at 126. The upside objective should now be to 128.13.

125.78 should now be support. And 124 should also be support.

Short term momentum has turned bullish.

GLD:

Minor level: 125.78
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88 <
Minor level: 121.10 ***
Minor level: 119.53
Major level: 118.75

The GLD closed at 122.13. 121.48 should now be support.

Minor resistance is at 122.66. And minor support is at 121.10.

XLE:

Major level: 73.44
Minor level: 72.66
Minor level: 71.09
Major level: 70.31 <
Minor level: 69.92
Minor level: 69.14
Major level: 68.75
Minor level: 68.36
Minor level: 67.58
Major level: 67.19

The XLE closed at 70.03.

69.14 is now short term support. Resistance is at 71.09.

The 30 minute chart is in an uptrend and the 60 minute chart is close to moving into an uptrend.

FXY:

Major level: 89.06
Minor level: 88.67
Minor level: 87.89
Major level: 87.50
Minor level: 87.11
Minor level: 86.33
Major level: 85.94 <
Minor level: 85.55 ***
Minor level: 84.77
Major level: 84.38 <

The FXY closed at 84.71, within six cents of the minor 84.77 level.

Two closes above 84.77 and the FXY should test 85.94.

84.47 is minor support.

AAPL:

Major levels for Apple are 175, 171.88, 165.63, 162.50, 159.38, and 156.25.

Yesterday, Apple closed at 175.25, holding above the 175 level, which should be support.

Minor support should be at 174.61 and 177.34 is minor resistance.

WATCH LIST:

Bullish Stocks: AMZN, GOOGL, AVGO, ALGN, BDX, STZ, NVDA, FLT, AAPL, OLED, MA, CME, DE, ALNY, SWKS, WDAY, MSFT

Bearish Stocks: TSRO, EXP, GPC, AAP, ABC, SRCL, ALK, SLB, PZZA, ALKS

Be sure to check earnings release dates