October 2, 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.

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You should have closed out the long debit spread on Celgene yesterday. It turned out to be a quick 4 day trade.  And if we get another entry, I would consider putting it back on.

After gapping up off the open by 12.31 points, the market made little headway.

From the open at 2,926.29, the S & P 500 ran to a high of 2,937.06 before selling off the balance of the day.  The high came in at exactly 10:30 EST, which is one of the critical intra day turning points.

After topping out, the market dropped to a low 2,917.91 before rallying back to close at 2,924.59.

So, even though the S & P 500 closed 10.61 points higher on the day, it could not close above the open.  This is usually a bearish sign.  Especially after a bullish gap.
 
The daily bar formed a doji.  As you know this means indecision.

The levels to monitor are the high, low and close, which are listed above.

The other key levels for the S & P 500 are the 2,925 to 2,927 area.

Finally, the S & P 500 could close above the minor 2,927.28 level.  It got about 10 points above, but closed about 3 points under it.

The market will have to clear this level to head higher.

Pre open, the S & P 500 is trading about 3.50 points lower.

Watch the levels I mentioned above. 

Also, strong support should be at 2,902.52, not only because it is the midpoint of the monthly bar, but it's right at the 2,902.83 level.

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 12.07.  Yesterday was the third day the VIX closed under the major 12.50 level.

For the market to move lower, I would expect a close above the 12.50 level on the VIX.

12.11 is a minor support level. If the VIX breaks under 12.11, I would expect a drop to 10.94.  And yesterday closed one cent above it.  A break under the minor 12.11 level and the VIX should drop.

SPX: 

Major level: 2,988.30 XXX
Minor level: 2,976.10
Minor level: 2.951.70
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 

2,907.70 is a minor support level. 

I would expect support at the minor level, but if the S & P 500 breaks under it, it should continue down.

The short term intra day 30 and 60 minute charts still remain bullish.  Technical support is now around 2,905. 

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 

The QQQ closed at 186.17. The QQQ did hit the 187.50 objective.  Yesterday's high was 3 cents above it.

184.38 and 185.16 should provide short term support.

Both 30 minute chart and the 60 minute charts are bullish. Technical support is at 183.48.

IWM:

Minor level: 172.66 
Major level: 171.88 
Minor level: 171.10 
Minor level: 169.53 
Major level: 168.75  <
Minor level: 167.97 
Minor level: 166.41 
Major level: 165.63 
Minor level: 164.85
Minor level: 163.28
Major level: 162.50

The IWM closed at 166.33.  The IWM broke under the minor 167.97 level.  It should test 165.63.  

Resistance should now be at 167.97 and 168.75.

The IWM is the only index still in downtrends on the 30 and 60 minute charts.  Technical resistance is at 170.

The IWM has dropped under the lower band on the 30 minute chart, indicating a bounce should happen.

TLT:  

Major level: 121.88
Minor level: 121.10 
Minor level: 119.53 
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 116.15.  It sold off on climax volume.  The TLT is very close to the major 115.63 level.

A close today under 117.19 and I would expect the TLT to drop as low as 112.50.

Short term charts remain bearish.  Technical resistance is at 118.  I would not expect a push higher without the 30 minute chart crossing into an uptrend.

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 112.57.  The GLD managed to close above the major 112.50 level for the second day.  A break under 112.50 and the GLD should drop lower.

The GLD will need to bounce up to the 116 area for me to consider that the downtrend is over.

Resistance should be at 114.06.  Technical resistance is at 113.38. 

112.50 is a key level.  If the GLD cannot hold this level, I would expect it to drop about 10% lower.

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 76.79.  A close today above 75.78 and I would expect a test of 78.13.

75.78 should offer support.  

Both short term charts are in uptrends.  Technical support is at 76.

FXY:

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 reversed and closed at 83.87.  I would expect the FXY to drop to 83.59.

84.38 should be resistance now.

Short term charts remain bearish.  Technical resistance is at 85.30.

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 227.26.  This now sets up a scenario where if Apple can close above 226.56, it should test 231.25.

The 30 minute chart is still in a downtrend, but it is very close to crossing into an uptrend.

If the 30 minute chart can cross into an uptrend, I would expect it to head higher.

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.