October 9, 2018 - MDT Pro Tips A.M.

CURRENT POSITIONS:

GOGO Long at $19.93
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DUST Long $4.50
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SNAP Long at $14.54
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OI Long Feb $19 call @ $1.70
OI Short Feb $22 call @ $0.55
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Yesterday, the S & P 500 opened with about an 8 points bearish gap.

Price continued to drift lower until bottoming out at 2,862.08 at just before 12:00 EST.

From there it managed to rally back to close at 2,884.43.  The net effect is that the S & P 500 closed only 1.14 points on the day.

A bounce here was expected due to the fact that the S & P 500 was trading at its lower extreme bollinger bands on the 30 minute chart. 
 
The extreme bands easily depict when a bounce is oversold or overbought.  And once again, it marked a short term oversold situation for the market.

And when price does take out an extreme band, there is a very high probability that it will be retested.

And this morning before the open, the S & P 500 is trading about 15 points to the downside.

This should put today's open at around 2,869.

That price level is right at last week's close, which was 2,869.29.

As I mentioned yesterday, based on last week's weekly price bar, there was about an 80% chance that last week's low should be violated before the high.

And we should get that today.

Once that criteria is met, a mid week reversal is possible.

And the likely area for that reversals should be in the 2,841.80 area. A drop to this level would be a two level drop off the top which is a normal correction in a bull market.

The other key level for today should be 2,865.95 level.  That is the lower band on the 30 minute chart.  This should be tested at the open.

How the market trades at that level should set up the probabilities for the trade action for the balance of the week. 

Resistance from yesterday's daily bar is in the 2,875.77 to 2,880.98 area.

You also want to watch the low which was 2,862.08.

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 15.81.  The high for the day was 18.38 points, which was within 37 cents of the 18.75 objective.

The VIX also closed above the minor 15.63 level, which I mentioned yesterday.  Watch to see if the VIX can hold this level.  If it does, it heads higher.  If not, a drop to 12.50 is possible.

SPX: 

Major level: 2,988.30 
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 <

As I mentioned above, a drop to 2,841.80 would be a normal pullback.  Having said that, the S & P 500 would need two closes under 2,878.40 to confirm a drop to that level.

A drop lower would make me concerned that a larger down swing could be coming.

Technical resistance is at 2,896.  And as I said above, watch the 2,865 area.

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 179.05. Yesterday was the first close under 179.69.  A close today under it and the QQQ should test 175.

I do feel that strong support should come in at the 175 level.  

181.25 should offer resistance.

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

The IWM closed at 161.82.  To move to 156.25, the IWM would need two closes under 160.94.

The midband on the daily chart is 157.58, which should also offer support.

162.50 should be resistance at this point.

164.06 is a short term resistance level. 

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

The IWM is trading under the lower bands on both the 30 and 60 minute charts.  Short term oversold and a bounce should be forthcoming.

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 continues to drop and closed at 112.66.  Short term, the TLT is oversold and could bounce. We know that because it is trading under its extreme band on the daily chart.  That level is 112.96.

And the TLT is now within 16 cents of the 112.50 objective.

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

The TLT is sitting at the bottom band on the 30 minute and the 60 minute chart.  That level to watch is 112.35.

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 112.54.  Watch to see if the GLD can hold 112.50.  If the GLD breaks under 112.50, it could drop to as low as 100.

Watch the 112.50 level today.

Minor resistance should be at 114.06.  

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 77.10.  The XLE continues to try and take out the 78.13 level.

If the XLE can close above 78.13 for two days, it should move up to 87.

75 should be strong support.

Both short term charts are in uptrends.  Technical support is at 74 and 75.40.

FXY:

Minor level: 84.97 
Minor level: 84.58
Major level: 84.38
Minor level: 84.18 
Minor level: 83.79 **
Major level: 83.59 <
Minor level: 83.40
Minor level: 83.01
Major level: 82.81

The FXY closed at 84.53.  The FXY bounced and actually closed above the 84.38 level.  We were looking for a bounce from its oversold condition.

If the FXY can reclaim the 84.38 level, it should consolidate before heading higher.

Short term charts remain bearish.  Technical resistance is right at 84.80.

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 223.77.  Watch the 223.44 level on the downside.  A close today under 223.44 and Apple should drop to 218.

Apple could drop to 212.50 without affecting its uptrend.

Short term charts remain bullish.  Technical support is at 222.

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.