October 16, 2018 - MDT Pro Tips A.M.

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.........................................................................................

Yesterday, the markets quieted down a bit.  Quietly consider the long-range days we have had.

The range yesterday was only 26.96 points.  Compared with the daily average true range of 31.85, the range was actually less than the average.

For the day, the S & P 500 closed at 2,750.79, down 16.34 points.

Yesterday was almost an inside day, but the high was 22 cents higher than Friday's high.  

But, we did have a divergence.

And that was the fact that both the S & P 500 and the VIX closed to the downside.

What is interesting about this divergence is that the last time we had both the S & P and the VIX close to the downside was on September 21, 2018.

This day also just happened to be the EXACT top in the market.

This divergence tells us that this sell off may be near.

If the S & P 500 can hold above the recent lows at around 2,734, this could be true.

Also, a four-level drop off the top is to the 2,744.10 level.  And this is where the market is trying to hold.

Having said that, if 2,744.10 is violated, I don't see the S & P falling under 2,695.

Resistance from yesterday's daily bar is in the 2,757 to 2,762 area.

Also, continue to monitor the resistance level from last week's weekly bar.  That area is in the 2,803 to 2,822 range.  

Earnings start to pick up this week.  This afternoon after the close we will hear from NFLX and IBM.

Pre open, the S & P 500 is trading about 18 points higher.

Continue to monitor the levels as I mentioned.

Tomorrow we will take a look at the sentiment indicators I follow.

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 21.23.  As I mentioned, both the VIX and the S &P closed to the downside.  

The VIX is back inside the upper band on the daily chart.  That level is 25.51.

This is close to the major 25 level, which should also offer resistance.  

Biased for a move back to 18.75.

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 is holding above the major 2,744.10 level.  At this point, for the market to move higher, it will need two closes above 2,756.33.

So, watch to see if the market can get above and hold this level.  Based on the pre market activity, the S & P 500 should open just above it.

The midband on the daily is 2,734. Watch to see if the S & P 500 can hold this level.  This level should offer support.

The S & P is trading under the lower band on the 60 minute.  That level is 2,773. The S & P 500 should open above it.  Look for support at that level if the market does pullback.

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 172.21.  If it can clear 175, I would expect support there.

The midband is 167.16 on the daily chart and it should offer support.

Also, if the QQQ can clear 172.30, look for support at that level.

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 154.17.  A test of 150 is likely.  And if the IWM does test 150, I don't see it dropping below it.

Probably the most oversold market and should bounce.

Watch to see if the IWM can close above 154.69.  Support should be at 151.56.

The lower band on the 60 minute is 154.30.

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 114.42.  The TLT would still need two closes above 114.45 to move higher.

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.

The 114.06 level should offer support.

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 116.00.  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. Look for resistance at 116.80.

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 72.39.  The XLE broke under the 75 support level.

If the XLE can hold 72.66, should retest 75.

We got a bounce as expected.

The 60 minute chart remains bullish.    71.88 is a key level for the XLE and should offer support.

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 85.52.  The FXY is starting to still after the bounce.

The next level on the upside is 85.36.  A close today above 85.36 and the FXY should test 85.94.

Watch to see if the FXY can hold 85.16.

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 217.36.  Still needs two closes above 220.31 and Apple could test 225.

To move lower, Apple needs two closes under 217.19.

WATCH LIST:

Bullish Stocks: ESL, PEG, CHL, PYX, XOXO, NYT, VALE

Bearish Stocks: TSLA, FDX, BIDU, MMM, MLM, BABA, IBM, ITW, CB, SAGE, RCL, OLED, KLAC, ITW, KLAC

Be sure to check earnings release dates.