September 27, 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.

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

FEYE Long at $16.69
Total Premium Collected - $1.26
Short Sept 28th - $17 Call @ $0.33

CELG Long Nov $90 Call at $3.20
CELG Short Nov $96 Call at $1.47

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If you followed the alert from yesterday, you would have added a debit spread on CELG.

I mentioned yesterday how we were contemplating whether the low for the week was in.  As you may recall, Monday's low was 2,912.63 and Tuesday's low was 2,913.70.

The lows were within one point of each other.

As it turned out, both lows were taken out yesterday by about 10 points.  The low came in at  2,903.28 or about 10 points under the prior weekly lows.

The major downswing occurred after 2:00 PM EST when the Fed made their interest rate announcement.

In fact, the market topped out at 2,931.15 at 2:18 PM EST.  After that time, the market dropped straight down to a low of 2,903.28 at 3:48 PM EST.

This was a drop of 28 points in about an hour and one half.

This is the type of price action that can happen on days where major announcements are made.  In fact, I warned about this.

The question now is where does the market go from here?

There are a couple of factors to consider.

The first is that the sell-off yesterday did not take out last week's low, which was 2,886.16.

This is a level to watch if the sell-off continues.  

I bring this up because the odds are about 80% that last week's high would be violated before the low.

Having said that, for the day the S & P 500 closed at 10% of the daily bar.  This tells us that there is roughly a 90% chance that yesterday's low will be violated before the high.

The other factor for the balance of the week is that tomorrow closes out the month of September. But, I will discuss the monthly figures tomorrow.

Pre open, the S & P 500 is trading about 2 points higher.  I am looking for a violation of yesterday's low and then a bounce based on the short term oversold condition.

The resistance level from yesterday's daily bar is in the 2,911 to 2,917 area.
 
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 12.89.  Yesterday closed above the 12.50 level. The VIX closed right on the minor 12.89 level.

At this point, 14.06 should be resistance.  If the VIX can close above 14.06 for two days, it would tell us that it should head higher.

12.50 and 12.11 should be support.

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 

Minor resistance should be at 2,919.90.  And watch to see if the S & P 500 can hold the 2,907.70 level.

If it fails at 2,907.70, a drop to 2,895.50 should be the next move.

The short term intra day 30 and 60 minute charts still remain bullish.  Technical support is now around 2,888. 

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 184.27. Watch the minor 183.59 level.  If the QQQ breaks under the level, it could drop to 181.

The short term 30 minute chart is close to crossing into an uptrend.  If that can happen, I would expect the QQQ to head higher.  Technical support is at 182.40.

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 168.03.  The key short term level is 167.97.  If the IWM breaks under this level, a drop to 165 should be the next move.

Like the S & P 500, the IWM is oversold short term.

169.53 should offer support.

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 117.50.  Interesting how the TLT jumped on a day when the Fed raised rates.  But, we knew the TLT was oversold.

At this point, 116.80 should be support.  And if it can clear 117.58, I would expect it to head higher. 

Short term charts remain bearish.  Technical resistance is at 119.50.

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 113.05, closing just under the minor 113.67 resistance level again. 

Resistance should be at 113.67, and at 114.06.  I would not expect a move higher than 114.06.  And 112.50 should be support.

The GDX is retesting the lower band on the daily.  The lower band is 109.83.

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 75.95.  The objective should still be to 78.13.

75 should offer support.  And minor support should be at 75.39.

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

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 **
Minor level: 84.58
Major level: 84.38

The FXY reversed and closed at 84.83.  Yesterday's low was 84.54 or 16 cents above the 84.38 level. 

We were looking for major support at 84.38.  If the FXY can consolidate just above 84.38 I would expect it to start moving higher.

85.16 should be minor resistance.

Short term charts remain bearish.

AAPL:
 
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 222.42.  218.75 should offer support on a pullback.

The 30 minute chart is still in a downtrend. And yesterday, Apple consolidated right at the midband, which is 222.47.  Apple needs to clear this level to head higher.  As it turned out, Apple was turned back at the midband.

WATCH LIST:

Bullish Stocks: BA, HUM, ANTM, BDX, FLT, MA, HD, AET, AMGN, CME, HON, EW, UNP, CLX, RACE, ZBH, ALXN, NKE, CVS

Bearish Stocks: MLM, BLUE, SAFM, MAN, R, PRGO, TPX, LEN, MD, GIS, BRKR, JD, HAIN

Be sure to check earnings release dates.