September 18, 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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Yesterday saw profit taking in the markets, with the S & P 500 selling off 16.18 points, to close at 2,888.80.

And this was after the S & P 500 have two consecutive closes above
2,902.83. This action made the active objective for the S & P 500 up to the major 2,939.50 level.

So, why the pullback?

Well first off, as I have mentioned before, often when the market takes out a major level, which was 2,890.60, it will often stall at the next upside level.

The fact that the S & P 500 managed to close above 2,902.83 for two days tells us that there is a very high probability that the market will revisit that level again. And potentially head higher.

The second fact was that the S & P 500 did have two closes under 2,878.40. This happened on the 6th and 7th of September. On the 6th, the S & P 500 closed at 2,878.05. Though it was only 35 cents under the minor 2,878.40 level, it did close under it.

This tells us the retest of 2,878.40 is quite possible.

And yesterday's close was within 10 points of that level. So, watch to see if that levels holds as support today.

The other levels to watch for today will be the weekly support level, which is in the 2,887 to 2,893 area. The market closed within this area yesterday.

And finally, for the day, the market closed at 14% of the daily price bar. This tells us that there is roughly an 86% chance that yesterday's low will be violated before the high.

Where should resistance come in?

Watch the 2,895 to 2,897 area for resistance.

Pre open, the S & P 500 is trading about 6 points higher. An open about 6 points higher would put the market right at the daily resistance level. Watch to see if the market reverses there.

Watch to see if the market holds support in this area on a pullback.

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 13.58. The VIX had a spike of 12.5%. But, to move higher, the VIX will need two closes above 14.06. But, at this point, it should be resistance.

If the VIX does clear 14.06, I would expect it to head higher. On the downside, the key level is 11.72.

12.89 should be support.

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

The target is now to 2,939.50. The key levels today should be 2,890 and 2,897.

Short term intra day 30 and 60 minute charts are still bullish. Technical support is now around 2,885. This level should offer support.

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 181.34. The objective should be up to187.50.

Watch to see if the minor 179.69 level can hold as support.

The short term 30 minute chart has crossed into a downtrend, so momentum has shifted lower.

IWM:

Major level: 175.00
Minor level:174.22
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

The IWM closed at 169.56. A close today under 171.10 and the IWM should test 168.75.

169.92 is a minor resistance level.

TLT:

Major level: 123.44
Minor level: 123.05
Minor level: 122.27
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

The TLT closed at 118.55. To move higher now, the TLT will need two closes above 119.53. On the downside, the key level is 118.36. Two closed under this level and the TLT should drop to 117.19.

118.36 is a short term support level. Watch this level today.

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 113.61. Watch the 112.50 level. If this cannot hold as support, I would expect a further drop.

114.06 should be minor resistance. And minor support is at 113.28. A break under this level, and a drop to 112.50 should happen.

The gold miner index (GDX) still remains under the lower band on the daily chart. Wait for a close back inside the bands before nibbling on the long side.

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 74.38. Yesterday's high came within 12 cents of the 75 level.

73.83 should offer minor support. If the XLE can clear 75, I would expect it to continue higher.

Short term momentum is shifting to the upside. But, technical resistance is at 74.60. The XLE will need to clear this level to move higher.

FXY:

Major level: 86.72
Minor level: 86.53
Minor level: 86.14
Major level: 85.94
Minor level: 85.75 **
Minor level: 85.36
Major level: 85.16 <
Minor level: 84.97

The FXY closed at 85.50. A close today above 85.36 and look for the FXY to test 85.94.

85.16 and 85.35 should offer short term support.

Short term charts remain bearish.

AAPL:

Major level: 237.50
Minor level: 234.38
Minor level: 228.13
Major level: 225.00
Minor level: 221.88 **
Minor level: 215.63
Major level: 212.50
Minor level: 209.38

Apple closed at 217.88. Apple managed to close back inside the upper band, which is 225.99.

"I am not a big fan of shorting strong stocks, but Apple is in a situation where a short with a stop at the upper band maybe worth the risk. If the upper band holds as resistance, a drop to 217 could be the next minor move." From yesterday and in one day Apple hit the objective.

Short term oversold. Watch the 215.63 level. I don't see Apple breaking under it, but if it does, look for a move lower.

WATCH LIST:

Bullish Stocks: AMZN, ALGN, NFLX, HUM, NVDA, ADBE, BA, PANW, QQQ, AET, HON, CRM, UNP, GRUB, ADSK, CHKP

Bearish Stocks: GS, MLM, LRCX, BLUE, CRI,WLK, CELG, FSLR, TRP, BIG, CLVS, ACM, X, HUN, CARS

Be sure to check earnings release dates.