May 16, 2019 - MDT Pro Tips A.M.

CURRENT POSITIONS:

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Starting to look like the 2,812.50 level has held as major support for this selloff, especially when you consider the fact that the S & P 500 has now had two closes above the minor 2,832.03 level.

This now puts the objective for the S & P 500 back up to the 2,890.60 level. And implies that 2,832.03 should now be support.

This also suggests that the selling climax on Monday has turned the market. If you recall, on Monday, the down to up volume was 9.85.

One selling climax can turn the market, but multiple climaxes definitely have more strength.

The other fact worth noting for this downswing is the VIX and S & P 500 divergence.

As I have mentioned in various updates, that the VIX and the S & P 500 will usually close in opposite directions.

So, if they both close to the upside or downside, it is a divergence.

I pointed out the fact that both the VIX and the S & P 500 closed higher on April 29th and April 30th. As it turned out, the high came the next day on May 1st.

As the market sold off, there were two days when both the VIX and S & P 500 closed to the downside.

The first day was on May 2nd and the second day was on May 9th. The bottom of this downswing was two days later on May 13th.

This divergence to me is a warning that something with the market is changing. Like the sentiment indicators I share, they are not 100% perfect in timing the reversal, but they clearly warn us that something is changing.

The divergence was actually pretty good I would say, in picking the top, as it came one day after the 2nd divergence.

For the day, the S & P 500 closed 16.55 points higher. It closed out the day at 2,850.96. The intra day range was 43.60, which was 123% greater than the daily average true range.

And the day closed out at 82% of the daily bar. This does suggest that the odds are about 80% that yesterday's high of 2,858.68 will be violated before the low of 2,815.08.

The support area from yesterday's daily bar is in the 2,835 area.

The other set up worth mentioning from yesterday is that I mentioned that a retest of the lower band on the 30 minute would be expected.

The lower band yesterday was 2,809. The market opened yesterday on a bearish gap. And hit a low of 2,815 before spending the rest of the day rallying.

I bring this up because the retest should hold above the lower band. And yesterday, it held 6 points above the lower band.

As you know, if the S & P 500 fell under the lower band, this would signal more selling to follow. So, once again the band patterns put you on the right side of the market.

So, even though yesterday's low fell below Monday's low, it held above the lower band.

I do feel it is worth mentioning that the S & P 500 is within 20 cents of crossing into an uptrend.

The 200 ema is now 2,772.33 and the 253-day average is 2,772.52. We may get this crossover today.

Pre open, the S & P 500 is trading about 9 points higher. This would project to an open around 2,869, which would be just above yesterdays high.

Based on this, the close of 2,850.96 should offer support on a pullback.

This afternoon we will get earnings from BIDU and NVDA. I'm sure both reports will be closely watched.

Here are the Key Levels for the Markets:

$VIX:

Major level: 21.88 <
Minor level: 21.10
Minor level: 19.53
Major level: 18.75 <
Minor level: 17.97
Minor level: 16.41
Major level: 15.63
Minor level: 14.85
Minor level: 13.28
Major level: 12.50
Minor level: 11.72

The VIX closed at 16.44. It gave back 8.97% and closed 1.62 points lower.

The VIX is now within 80 cents of the 15.63 level.

18.75 and 17.19 should be resistance now.

SPX:

Major level: 2,968.80
Minor level: 2,949.25
Minor level: 2,910.15
Major level: 2,890.60 <
Minor level: 2,871.08
Minor level: 2,832.03 **
Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93
Major level: 2,734.40
Minor level: 2,714.88
Minor level: 2,675.83
Major level: 2,656.30

At this point, 2,832.03 should be minor support. And if the S & P 500 can clear the 2,856.40 level, it should act as support.

There is also a minor support level at 2,941.80. If the market does drop under yesterday's close, look for this level to act as 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
Minor level: 173.44
Minor level: 170.31
Major level: 168.75
Minor level: 167.19

The QQQ closed out Friday at 183.09. Watch the 182.81 level today. If the QQQ can close above it, it should move up to 187.50.

182.03 is minor support.

Like the S & P 500, the QQQ held above the lower band on the 30 minute. The midband is now 187.19 and should offer some resistance.

181.25 is a minor support level.

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 <
Minor level: 154.69 **
Minor level: 151.56
Major level: 150.00
Minor level: 148.44

The IWM closed at 154.04. 153.13 should be support.

I am looking for a retest of 156.25 at this point. The key will be if the IWM can clear it.

150 should offer major support.

The IWM also held support above the lower band on the 30 minute chart.

TLT:

Major level: 128.13
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17 **
Minor level: 125.39
Major level: 125.00
Minor level: 124.61
Minor level: 123.83
Major level: 123.44
Minor level: 123.05

The TLT closed out at 126.13. Next objective is to 126.56. If it clears this level, a run to 128.13 is possible.

125 should be major support.

Short term charts still remain strongly bullish.

GLD:

Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
Minor level: 124.22
Minor level: 122.66 **
Major level: 121.88
Minor level: 121.49
Minor level: 120.70
Major level: 120.31<
Minor level: 119.92
Minor level: 119.14
Major level: 118.75 <

The GLD closed at 122.39. The GLD will still need two closes above 122.66 to test 125.

Watch to see if the GLD breaks under 121.88. If it does, it should move lower.

If the GLD cannot clear 123.44, I would expect a sharp drop. At this point though, 120.31 should be support.

XLE:

Major level: 71.88
Minor level: 71.10
Minor level: 69.53
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 <
Minor level: 61.72
Minor level: 60.16
Major level: 59.38

The XLE closed at 64.05. The objective for the XLE should now be up to 65.63.

Clearing 65.63 should be extremely bullish.

63.28 is minor support. A break under this level and the XLE could test 62.50 again. But, I would expect strong support at 63.28.

65.40 is technical resistance.

AAPL:

Major level: 212.50
Minor level: 210.94
Minor level: 207.81
Major level: 206.25
Minor level: 204.69
Minor level: 201.56
Major level: 200.00
Minor level: 198.44
Minor level: 195.31
Major level: 193.75
Minor level: 192.19
Minor level: 189.06 **
Major level: 187.50

Apple closed at 190.92. A close above 189.06 and Apple should move up to 195.31.

Apple did reclaim the 253-day average.

The 200 ema is 185.38 and the 253-day average is 189.89. Watch for a break of either level.

If Apple can hold above the midband, I will look for an entry to go long.

WATCH LIST:

Bullish Stocks: NOW, FLT, LLL, WDAY, MCD, HRS, MKC, SAFM, WIX, TEAM, DRI, AWK, OLLI, ZEN, ROKU, PAYX, MNST,

Bearish Stocks: GOOGL, ILMN, GWW, TSLA, AMGN, NVDA, FFIV, BIDU, CAT, UPS, CTXS, AMG, SLG, PSX, NTAP, SQ, R

Be sure to check earnings release dates.