September 12, 2016 - 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.

Mad Day Trader - Monday September 12, 2016 - 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 - $.75

ETE Long $14.05
Total Premium collected - $2.47
Short Sept 16th-$19 Call - $.18

P Long $13.38
Total premiums collected - $1.20
Short Sept 23rd-$14 call - $.50

DUST Long $4.50
Total premiums collected - $.70

FCX Long $12.45
Premium collected - $.24

CIEN Long Oct 21-$22 Call - $1.39
CIEN Short oct 21- $24 Call - ($.52)

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The week ended with the massive 53.49 drop in the S & P 500 on Friday. And an almost 40% move for the VIX on the same day.

The move began with the failure of the S & P 500 to get through the 2,187.50 level.? At least I had been warning that the market had struggled to close above 2,187.50.

In fact, for the past two months, there was only one day that managed to close above it.

The low for the VIX on Friday was 12.52 before rallying to close at 17.50.? This was a move of 39.89%.

Is this the end of the bull run?

I don't think so.? We should see a rally.? And that rally should come in a few days.

I say this for a few reasons.? The first is that Friday qualified as a selling climax.

In fact, the down to up volume was a whopping 31.69.? I consider a selling climax when the down to up volume exceeds 9 to 1.

And Friday's level was almost three times the minimum level to qualify as a selling climax.

To put this into perspective, the last time we had a selling climax of this magnitude was on August 24, 2015.
On that day, the down to up volume read 41.08.

The market bottomed that week at 1,867.01 before moving up to a pivot high of 2,116.48.

The second reason I feel we see another rally is that the S & P 500 is almost at the next level, which is 2,125.

The 2,125 level should offer support, however, the S & P 500 could drop 2,062.50 and the uptrend would still be in place.

By the way, the last sell off, which was right after the Brexit vote, saw a move down of two levels.

A two level move off the last peak would bring the market down to around the 2,062.50.

We should know in a few days if the market will move down to that level.

We will know if the S & P 500 closes for two days under 2,109.40.? And if the VIX takes out 20.31.

Continue to follow the levels.

Here are the key levels for the markets.

VIX:

Major level - 21.88
Major level - 18.75
Minor level - 17.96
Major level - 15.63 **
Minor level - 14.85
Minor level - 13.28 *
Major level - 12.50 *
Minor level - 11.72
Minor level - 10.15
Major level - 9.38

15.63 should offer support for the VIX at this
point.

18.75 should be the objective for the VIX.
If it stalls at that level, expect the market to reverse to the upside.

S & P 500 Cash Index:?

Major level - 2,250.00
Minor level - 2,234.38
Minor level - 2,203.12 *
Major level - 2,187.50 **
Minor level - 2,171.88 **
Minor level - 2,140.62
Major level - 2,125.00
Minor level - 2,109.38
Minor level - 2,078.12
Major level - 2,062.50

The S & P 500 dropped to almost the? 2,125 level.?

Based on where the futures are trading before the open, expect the 2,125 level to be hit.

2,117.20 should offer minor support.?

2,109.40 is the next major level to watch.? Two closed under that level and the S & P 500 should drop to 2,062.50.

Nasd 100 (QQQ):?

Major level - 121.88
Minor level - 120.31
Minor level - 119.53
Major level - 118.75 *
Minor level - 117.97 *
Minor level - 116.41 *
Major level - 115.63
Minor level - 114.85
Minor level - 113.28
Major level - 112.50?

The QQQ dropped 2.52% on Friday and closed at 114.28.

A close today under 114.84 and expect a move down to 112.50.

Minor support is at 113.28.

TLT:?

Major level - 143.75
Minor level - 142.96
Minor level - 141.41
Major level - 140.63
Minor level - 139.85
Minor level - 138.28 *
Major level - 137.50 *
Minor level - 136.72
Major level - 134.38

The TLT broke under the horizontal channel on Friday, closing at 135.52.
Objective should be to 134.38.

If 134.38 cannot hold, I would expect a move to 131.25.

GLD:

Major level - 131.25
Minor level - 130.46
Minor level - 128.91 *
Major level - 128.13 *
Minor level - 127.35 *
Minor level - 125.78
Major level - 125.00
Minor level - 124.22

A close today under 127.35 and the GLD
should test 125.

125 should still offer strong support.

XLE:

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 - 67.96
Minor level - 66.41
Major level - 65.63
Minor level - 64.85

68.75 should be the objective for the XLE.

And 68.75 should be strong support. A violation of that level and the XLE could drop to 67.97.

FXY:

Major level: 96.09
Major level: 95.31
Major level: 94.53
Major level: 93.75 **
Major level: 92.97
Major level: 92.19

The FXY is just above the 93.75 level, which should offer support.

If 93.75 is violated, look for a move to 92.19.

Apple:

Major levels for Apple are 112.50, 106.25, 100, 93.75,? and 87.50.

Apple should test the 100 level, which should offer support. If 100 cannot hold, the next major level should be 93.75.

Watch list:
Bullish Stocks: BIDU, BABA, MA, DXCM, OXY, OSK, SLR, TOT, PTC, CCE, FNSR, NLS

Bearish Stocks:? REGN, AAP, CELG, DIS, COL, SRCL, SIG, RHT, ESRX, RCL, DDS, SBUX, WSM, LEN

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Be sure to check earnings release dates.