October 27, 2017 - MDT Pro Tips A.M.

Before I begin today, I do need to mention that we have two positions that expire today. The first is the short $15.50 call on SNAP.  SNAP is trading under the strike, so it appears highly likely the calls will expire today.

The second position are the short $15 calls on THC.  Similar to SNAP, THC is trading under the $15 strike.  However, based on a news announcement this morning, THC should open about 7% higher.  If the calls need to be adjusted, I will send a separate email.

Assuming the calls expire today, I will look to sell another round of calls next week.

The S & P 500 ended up closing at 2,560.40, up 3.25 points on the day.  The low for the day was 2,559.80, which was just above the downside level of 2,558.60.

The failure to close for the second day under 2,558.60 negates the bearish implications.  The S & P 500 would still need two closes under that level to move lower.

However, the range for the day was only 7.27 points, which was a contraction.  But, after the 23.40 range on Wednesday, a contraction would not be unusual.

I have been harping on the idea of when to short the markets.  And have repeatable said that now is not the time.

This is especially true when both the short term 30 and 60 minute charts are bullish.

As you know, I use a 200 exponential moving average (EMA) and a 253 day simple average (SMA) to determine the trend. When the 200 EMA is above the 253 SMA, the trend is bullish.  And when the 200 EMA is below the 253 SMA, the trend is bearish.

Pretty simple way to determine the trend.

And when both the 30 minute and 60 minute charts are both bullish, you really don't want to consider shorting.  And that is the set up in the S & P 500 at the moment.

Your best bet to profit would be to try and buy against support.

So, where did support for the S & P 500 come in at?

On Wednesday, the S & P 500 dropped to a low of 2,544.  The price stalled virtually at the mid band on the 30 minute chart.  From that point, the market rallied to 2,567 in two days.

On the SPY, which tracks the cash index, that move was 2.30 points, which was a big enough move to make money using weekly call options.

This is just a recent example of why I like to use the extreme bollinger band settings that I show on my webinars.  Quite frankly, it is amazing how many times price will stop right at the midband.

The market has a bullish bias and should open slightly higher this morning.

Also, ther are some big gaps off earnings this morning.  AMZN should open to the upside about $81.

GOOGL appears set to open about $42 to the upside.  

On the downside, BIDU is off about $18 and EXPE is off $23.

Continue to follow the resistance levels.  

Here are the Key Levels for the Markets:

$VIX: 
 
Major level: 12.50
Minor level: 12.11
Minor level: 11.33 
Major level: 10.94 <
Minor level: 10.55
Minor level: 10.16 **
Major level:   9.38 <
Minor level:   8.99 
Minor level:   8.20
Major level:   7.81

The VIX closed at 11.47.  The high was 11.81, so the VIX could not test 12.50.

11.80 should be resistance.  And 10.55 should be still minor support.

$SPX: 

Minor level: 2,587.88 **
Major level: 2,578.10 <
Minor level: 2,558.60 **
Minor level: 2,548.85 
Major level: 2,539.10 
Minor level: 2,529.33 
Minor level: 2,509.78 
Major level: 2,500.00 
Minor level: 2,492.20 

With the S & P 500 recovering above the 2,558.60 level, it would still need two closes under that level to head lower.

Minor support should be at 2,548.80.  And look for 2,558.60 to offer support. 2,587 could offer resistance.

Short term momentum still remains bullish.

QQQ:  

Major level: 150.00
Minor level: 148.44
Minor level: 145.31 ***
Major level: 143.75 <
Minor level: 142.18 ***
Minor level: 139.06 
Major level: 137.50 5
Minor level: 135.94 
Minor level: 132.81

The QQQ closed at 146.96.  

The minor support is at 146.88.  149.22 could offer minor resistance.  Short term momentum remains bullish.  Looking for a bounce up to 148.

IWM:

Minor level: 150.78 **
Major level: 150.00 <
Minor level: 149.22 **
Minor level: 147.66 
Major level: 146.88 
Minor level: 145.32
Minor level: 144.53 
Major level: 143.75 
Minor level: 142.97

The IWM closed at 148.76. 

147.66 should offer support.  And the minor 148.44 level should also offer support.

Looking for a retest of 150.

TLT:  

Major level: 128.13 
Minor level: 127.35
Minor level: 125.78 
Major level: 125.00 
Minor level: 124.61
Minor level: 123.83
Major level: 123.44 
Minor level: 123.05 **
Minor level: 122.27
Major level: 121.88

The TLT closed at 122.43. Look for a move down to 121.88.  

123.44 is minor resistance and 120.31 is minor support.

GLD:  

Minor level: 125.78 
Major level: 125.00 
Minor level: 124.22 
Minor level: 122.66 
Major level: 121.88 <
Minor level: 121.10 ***
Minor level: 119.53
Major level: 118.75

The GLD closed at 120.33.  A close today under 121.10 and the GLD should test 118.75.

Resistance is at 121.09.  And minor support is at 119.53.

XLE: 

Major level: 71.89
Minor level: 71.11
Minor level: 69.54
Major level: 68.75 **
Minor level: 67.97 <
Minor level: 66.41 
Major level: 65.63 
Minor level: 64.85 
Minor level: 63.28 
Major level: 62.50 

67.19 is a minor support level for the XLE.  If it can hold this level, it should head back up.

But, resistance is at the midband, which is 67.73.

Look for support at 66.80.  67.77 should be minor resistance.

FXY:

Major level: 89.06
Minor level: 88.67
Minor level: 87.89 
Major level: 87.50 
Minor level: 87.11 
Minor level: 86.33 
Major level: 85.94 <
Minor level: 85.55 ***
Minor level: 84.77 
Major level: 84.38 <

The FXY closed at 84.26.  

83.98 should offer minor support. 84.77 should offer minor resistance.

Expecting a bounce soon.  If the FXY can hold the 84.38 level, it should move higher.

AAPL:

Major levels for Apple are 165.63, 162.50, 159.38, 156.25, 153.13, and 150.

Apple closed at 157.41, bouncing above the 156.25 level.  This level should now be support.

Low risk trade buying against 156.25 with a tight stop.

If Appple can clear the 157.81 level, I would expect a retest of 162.

WATCH LIST:

Bullish Stocks: BIIB, BA, MMM, LRCX, NVDA, CMI, ADBE, FB, PANW, HON, BLUE, DE, CAT, ADSK, VRSN, KLAC, ALL

Bearish Stocks: AYI, TSRO, PZZA, MMP, ACIA, DXCM, NWL, BPL

Be sure to check earnings release dates