October 12, 2018 - MDT Pro Tips A.M.

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Yesterday saw continued selling pressure.  With a close percentage of 1% on Wednesday, follow-through was expected yesterday.

For the day, the S & P 500 closed at 2,728.37, down 57.31.

And the range for the day was 84.63.  Not much less than the 89.16 range for Wednesday.

The only difference yesterday was that the close percentage was 21% as compared to the 1% on Wednesday.

And yesterday's down to up volume was 5.46.  Therefore, it did not qualify as a selling climax.

So, we have had only one selling climax in this downswing.  I would have preferred another one yesterday, but one can turn the market.

So, where is support now?  Now that we have dropped four levels off the top.

The midband on the daily chart for the cash index is 2,732.47, and the S & P 500 closed about 4 points under it.

If you look at the SPY ETF, the midband is 270.31 and yesterday's low on the SPY was 270.36.

I do expect support at the midband the first time it is tested.  So, we should know today if that level holds.

In looking at the resistance levels, the S & P 500 took out the major 2,744.10 level.  These means that off the top, the market has dropped four levels.

I do feel that strong support should come in at the 2,695.30 level.  If that level cannot hold, a drop to 2,500 would be possible.  But, we have other targets along the way to help confirm that.

Finally, the S & P 500 is oversold.  We know that by looking at the 30 minute and 60 minute charts.  And price dropped below the lower bands on both timeframes.

For the 30 minute chart, that price level is 2,796 and for the 60 minute chart it is 2,810.

So, the market dropped almost 100 points under the lower bands.

This set up a scenario where the market could bounce more than 100 points and it would be unusual.

But, we would expect a retest of the lower band once price does close back inside them.

Pre open, the S & P 500 is trading about 28 points higher.  But, with a close percentage of 21%, the market has roughly an 80% of violating yesterday's low before the high.

A retest of yesterday's low would be expected.

Resistance from yesterday's daily bar is in the 2,750 area.

Here are the Key Levels for the Markets:

$VIX: 
 
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  
Minor level:   7.81
Major level:   6.25

The VIX closed at 22.96.  It had a massive spike of 43.6%.

But it is approaching the upper band on the daily chart, which is 25.16. This level is right at the major level and should be resistance.

If the VIX is turned down at this level, the market should bottom.

The S & P 500 has moved four levels, but a move to 25 is only a two level move in the VIX.

SPX: 

Major level: 2,939.50 
Minor level: 2,927.28 
Minor level: 2,902.83 
Major level: 2,890.60 
Minor level: 2,878.40 
Minor level: 2,854.00 
Major level: 2,841.80 
Minor level: 2,829.60
Minor level: 2,805.20
Major level: 2,793.00
Minor level: 2,780.78
Minor level: 2,756.33
Major level: 2,744.10 <<
Minor level: 2,731.90 **
Minor level: 2,707.50
Major level: 2,695.30

The S & P 500 broke the support off the 2,744.10 line and actually closed under the next downside confirming level which is 2,731.90.

A close today under 2,731.90 and the objective should be to 2,695.30.

The midband on the daily is 2,732. Watch to see if the S & P 500 can clear this level.

The midpoint of the weekly bar is 2,802 which I would expect to be resistance. 
 
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

The QQQ closed at 169.60. Watch to see if the QQQ can reclaim the 175 level.

A close under 173.33 and the QQQ should test 168.75.

168.75 is a key level.  If the QQQ has two closes under 168.75, it could drop to as low as 156.

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

The IWM closed at 153.57.  A close today under 154.69 and the IWM should test 150.

Probably the most oversold market.

The lower band on the 60 minute is 157.57 and on the 30 minute is 155.26.

TLT:  

Major level: 115.63
Minor level: 115.24
Minor level: 114.45
Major level: 114.06
Minor level: 113.67
Minor level: 112.89
Major level: 112.50

The TLT closed at 114.87.  For the day, the TLT was up 1.38 or 1.22%.

The TLT bounced from its oversold condition.  The question is how high should this bounce go?

I think if the TLT can move up to the 117.19 level, a major bottom may be forming.

At this point, it was moved up 2 levels off the low.

Short term charts remain sharply bearish.  Technical resistance is at 116.  

GLD:  

Major level: 117.19 
Minor level: 116.80
Minor level: 116.02 **
Major level: 115.63 < 
Minor level: 114.85 
Minor level: 113.28 
Major level: 112.50 
Minor level: 111.72
Minor level: 110.16
Major level: 109.38 

The GLD closed at 115.78.  Like the TLT, the GLD bounced off its oversold condition.

I would not expect this bounce to move higher than 118.75.

Two closes above 116.02 and the GLD should test 118.75.

XLE: 

Major level: 78.13 
Minor level: 77.35 
Minor level: 75.78
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 72.80.  The XLE broke under the 75 support level.

Looks like the XLE will test the 71.88 level.

This is a key level.

Expect a bounce.

FXY:

Major level: 85.94 <<
Minor level: 85.75
Minor level: 85.36
Major level: 85.16 **
Minor level: 84.97 
Minor level: 84.58 
Major level: 84.38
Minor level: 84.18 
Minor level: 83.79 
Major level: 83.59 

The FXY closed at 85.33. The FXY continues to bounce from its oversold condition, as we expected.

The next level on the upside is 85.36.  Two closes above 85.36 and the FXY should test 85.94.

The 30 minute has crossed into an uptrend, suggesting that short term momentum is bullish.

AAPL:
 
Major level: 231.25
Minor level: 229.69
Minor level: 226.56 
Major level: 225.00 
Minor level: 223.44
Minor level: 220.31
Major level: 218.75
Minor level: 217.19 <
Minor level: 214.06
Major level: 212.50 <<

Apple closed at 214.45.  Yesterday's low was 212.32, of just under the major 212.50 level.

Watch to see if the 212.50 level holds as support.

The 30 minute chart remains bullish.  The lower band is 212.31.

WATCH LIST:

Bullish Stocks: AMZN, REGN, ALGN, NFLX, BA, FLT, MA, ADBE, EW, ADP, V, ALXN, FANG, PTC, DIS, SQ, ESRX, XLNX, WBA

Bearish Stocks: FDX, GS, MLM, LRCX, WYNN, SMH, KLAC, ALL, ALNY, JACK, PRGO, MNST, KHC, WRK

Be sure to check earnings release dates.