October 26, 2018 - MDT Pro Tips A.M.

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 $14.54
Total Premium Collected - $1.65

OI Long Feb $19 call @ $1.70
OI Short Feb $22 call @ $0.55

UNIT Long at $19.35
Total Premium Collected $0.45

PHM Long at $22.40
PHM Short Nov 2nd call @ $0.55
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So, with a rally and bounce of the S & P 500 closing 49.47 points higher, can we declare this correction over?

I doubt it.

First off, when you examine the price action from yesterday there are a few notable things about yesterday.

We had expected a bounce based on the fact that the S & P 500 was trading under the lower extreme band on the 60 minute chart.

And that is what we got yesterday.  It moved back inside the bands.

Because the lower band was violated, this now sets up a scenario where we would expect a retest of the lower band again.  The lower band is 2,670.89 and with the S & P 500 trading about 33 points lower before the open, we should no doubt see a retest of it.

Assuming the market does open where it is currently trading, it should open about 2 points above the lower band.

The question is will it hold?

That I cannot answer, but we know how the market should trade based on whether the lower band holds ... or doesn't hold.

The other factor about yesterday was that it was an inside day.  When you have a 55 point range for the day, it seems like this should not happen.  But when you look at the range for Wednesday, which was 90.70 points, a complete reversal of that high would be improbable.

With an inside day, we do expect an expansion.

And the resistance from yesterday's daily bar should be in the 2,690 to 2,695 area.

As you know, I tend not to 'predict' the market.  I use the resistance levels and how far the markets move in the context of the resistance levels as a determinant of whether a move should continue or fail.

But, on Monday, I will share a prediction as to where the next rally should fail, or I should say could fail.  You will be able to monitor this prediction and hopefully use it to your advantage.

I cannot release anything at the moment because the key is whether the low from Wednesday holds as support.

It does not appear that the earnings from the high flyers are helping the market at all.

AMZN reported last night and is trading about $156 to the downside.  It is down almost 9%.

And GOOGL is down about $60 or 5% pre open off their earnings.

Continue to monitor the levels as I mentioned.

Here are the Key Levels for the Markets:

$VIX: 
 
Major level: 31.25
Minor level: 29.69
Minor level: 26.56
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 

The VIX closed at 24.10.  This puts the VIX back under the major 25 level.  No doubt, the VIX will pop at the open.  Watch if it pops above 25.  If it does, it should be support.

At this point, resistance is at 28.13 and the upper band which is 25.95.  21.88 should offer support.

A turn to bear market would be indicated if the VIX ran to 31.25.

SPX: 

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 <
Minor level: 2,683.10
Minor level: 2,658.70
Major level: 2,646.50

Watch the 2,583.70 level today.  Two closes under that level and the S & P 500 should push down to 2,646.50.

And you know the implications of a close under 2,646.50.

Resistance should also be at 2,744.10 and minor support at 2,646.50.

QQQ:  

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 <
Minor level: 167.19
Minor level: 164.06
Major level: 162.50 <

The QQQ closed at 171.06.  Like the S & P 500, the QQQ had an inside day.

The QQQ closed above the mid band on the daily chart.  The midband is 167.89 and with an open under that level, it should be resistance.

168.75 is a key level for the QQQ similar to the 2,646.50 level for the S & P 500.  If the QQQ closes under 168.75 today, it could drop to 150.

171.88 should be short term resistance.  A retest of 166.49 is the likely scenario for today.

IWM:

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 <
Minor level: 148.44
Minor level: 145.31
Major level: 143.75 ***

The IWM closed at 149.11.  150 should be resistance now for the IWM.

Key level for IWM is 143.75.  Two closes under 143.75 and the IWM could drop to 125.

The 149 - 150 area should be strong resistance.

The lower band on the 60 minute is 144.78.  And a break under 143.75 and expect the IWM to head lower.

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 114.30.  The TLT will still need two closes above 114.45 to test 115.63.

The TLT would have to move up to 117.19 for the downtrend to be over.

115.23 is minor resistance.  And 114.06 is minor 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 116.40.  115.63 should now offer support.  And 117.19 is resistance.

Technical resistance is at 121.  And technical support at 114.

XLE: 

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 
Minor level: 67.97
Minor level: 66.41
Major level: 65.63

The XLE closed at 66.98.  A drop to 65.63 would be expected.  If the XLE
breaks under 65.63, I would expect a move down to 62.

The 68.75 level should offer resistance. And 67.97 as well.

A close today under 67.19 and the XLE should drop to 62.  Should happen.

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 84.90.  This now sets up a scenario where if the FXY closes under 84.97, it should drop to 84.38.

84.77 should offer minor support. And 85.06 is resistance.

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 219.80.  217.19 should offer short term support.  And 220.31 resistance.

Short term charts are bearish, so expect a bias to the downside.  Apple has held up pretty well during this sell off.

Best to avoid until a valid market reversal is in place.

WATCH LIST:

Bullish Stocks: ANTM, CME, LH, AWK, WBA, WBA, LW, PEG, CNK, NYT, DAR, TDS

Bearish Stocks: BIDU, GD, MLM, BABA, IBM, ITW, RHT, RCL, WYNN, SWKS, ALNY, WLK, SINA, CCL, SLB, MNST

Be sure to check earnings release dates.