October 16, 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

DYN Long at $12.55
Premium Collected $0.48

APA Long Oct $47.50 Call at $3.45

SNAP Long at $15.20
SNAP Short Oct 20th - $16.00 Call at $0.65
Premium Collected - $1.20

AMC Long at $15.27
AMC Short Oct $16 Call at $0.43

THC Long at $14.63
THC Short Oct $15 call at $0.40

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The market continues to inch up towards the next objective. The S & P 500 closed at 2,553.17 on Friday, within 25 points of the 2,578.10 objective.

But clearly, the market is contracting. The range for Friday was only 5.56 points. On the daily chart, the average true range (ATR) is 10.26. So, Friday's range was about half the ATR.

And the week, the S & P 500 formed an almost perfect doji bar. This of course, is where the close is about the open. And that certainly was true.

The week closed at 2,553.17 and opened at 2,551.39. The range for the week was only 16.05 points. Compared to the weekly ATR of 33.45, you can see that, similar to Friday's daily price action, the weekly range was about half the weekly ATR.

So, with a weekly doji bar and contractions on both the daily and weekly charts, what does this imply?

A doji can mean indecision. Or it can mean a pause before the trend continues.

With an objective still higher than the Friday close, I am still biased to the upside.

And all timeframes remain bullish, so if the market does pullback, I would expect at least another rally.

Last week's close was still about 110 points above the upper extreme bollinger band on the monthly chart. That level is now 2,438.14. It indicates how unusual the strength is for this market.

In fact, all major markets are trading above their extreme upper bollinger bands. A major correction will not happen until they close under the upper bands.

Support from last week's weekly price bar is in the 2,549 to 2,552 area.

And last week's high and low should be price points to monitor. The high last week was 2,557.65 and the low was 2,542.60. A breakout of either level should indicate that price would continue in that direction.

The VIX continues to trade around its all time lows. It closed at 9.61, under the minor 10.16 level. The higher levels on the VIX should continue to offer resistance and help to time long entries in the market.

Earnings season starts to heat up this week. This afternoon after the close, we will hear from NFLX. Tomorrow morning we get GS and MS. And tomorrow afternoon we get IBM.

Continue to follow the resistance levels.

Here are the Key Levels for the Markets:

$VIX:

Major level: 15.63
Minor level: 14.85
Minor level: 13.28
Major level: 12.50
Minor level: 11.72
Minor level: 10.16
Major level: 9.38 <
Minor level: 8.99 **
Minor level: 8.20
Major level: 7.81

The VIX closed at 9.61. Resistance for the VIX is in the 10.35 to 10.55 area. And with a close under 10.16, that minor level should also offer resistance.

To move lower, the VIX will need two closes under 8.99. To move higher, the VIX would need one more close above 10.16.

9.96 is a minor resistance level.

$SPX:

Major level: 2,578.10 <
Minor level: 2,558.60
Minor level: 2,548.85 **
Major level: 2,539.10 <
Minor level: 2,529.33
Minor level: 2,509.78
Major level: 2,500.00
Minor level: 2,492.20
Minor level: 2,476.00
Major level: 2,468.80

The objective is still to 2,578. 2,554.90 is a minor support level and Friday's high was just above it.

2,548.80 should be minor support.

2,561.00 could offer resistance. Short term momentum remains bullish.

QQQ:

Major level: 150.00
Minor level: 148.44
Minor level: 145.31 ***
Major level: 143.75 <
Minor level: 142.18 ***
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81

The QQQ closed at 148.34. The QQQ continues to move up to the 150 objective. Friday's high was within 1.50 points of the objective/

The minor support is at 147.66. 149.22 could offer minor resistance. Short term momentum remains bullish.

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 149.37. To move lower, the IWM would need two closes under 149.22.

151.56 could offer minor resistance and 148.44 is minor support.

TLT:

Major level: 131.25
Major 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 TLT closed at 125.85. A close today above 125.78 and the TLT should move up to 128.13.

125.78 is minor resistance and 124.61 is minor support.

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 123.82. 123.44 is minor support now. A close today above 122.66 and the objective should be 125.

Major resistance should be at 125.

XLE:

Major level: 71.89
Minor level: 71.11
Minor level: 69.54
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

The XLE closed at 68.14. The XLE continues to hold above the midband on the daily chart. The midband is 67.73.

67.97 should be minor support. 69.14 could offer resistance.

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 85.85. The major level now is 85.94. Watch to see if the FXY can clear this level. If it can't, it should fall back.

86.33 should offer minor resistance. 84.77 is minor support.

AAPL:

Major levels for Apple are 165.63, 162.50, 159.38, 156.25, 153.13, and 150.

Apple closed at 156.99, up 99 cents on the day.

The 30 minute chart has crossed into an uptrend. Short term momentum has turned bullish.

157.81 should also be a resistance level. And 154.69 is minor support.

WATCH LIST:

Bullish Stocks: GOOGL, AMZN, BIIB, LMT, BIDU, BA, FDX, MMM, ALGN, RTN, FB, ASML, PANW, MA, URI, JNJ, CAT, RHT, CHKP, UTX, ADSK, V, KLAC

Bearish Stocks: ULTA, DIS, AAP, RL, KHC, WBA, TSCO, DXCM, GE, AOBC, CCJ, BBBY

Be sure to check earnings release dates.