September 22, 2020 - MDT Pro Tips

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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.

The market sold off hard yesterday. The S & P 500 ended the day closing 38.36 points lower.

The day closed out at 3,281.11.

But if you measure the low on Friday to the low yesterday, the range was 63.30 points. And the daily price bar closed at 92% of the range of the daily bar.

So, the market was actually able to rally back off the lows and close above the midpoint.

Support should be around 3,255. Above this level, the next support level would be around 3,257.

Finally, the next level would be around 3,283.

Granted there are multiple areas that could impact the market today. But, that is what you get when you get a doji day like yesterday.

The market opened at 3,285.57, which was the high for the day. And the day ended up closing at 3,281.11, or only 4.46 points below the open.

If you measure the two major swings yesterday, you get a total of 108.48 points.

This was actually 182% of the daily average true range.

The two ranges were from the open to the low and then back up to the close.

The question is was there a logical reason to buy the low yesterday?

And the answer would be yes. But you would have needed to have intra day charts to do so.

You would know this if you plotted the extreme bollinger bands on your intra day charts. In fact, on tomorrow's webinar, I will show you why the logic suggested buying.

The question we need to address is if this could be the end of the pullback?

And my answer is no.

That is because the 60 minute chart for the S & P, as well as all the other major markets, have crossed into downtrends.

This would suggest we will see another downswing after a bounce.

And with the S & P trading below the midband on the 60 minute chart, that level should be resistance.

That level is around 3,354. So, the market could bounce almost 75 points before strong resistance.

Watch these levels as the market trades.

AZO reported this morning and is trading about $50 higher. And we here from NKE after the close tomorrow.

Thursday afternoon, we get earnings from COST.

Here are the Key Levels for the Markets:

$VIX:

Minor level: 32.03
Major level: 31.25
Minor level: 30.47
Minor level: 28.91
Major level: 28.13
Minor level: 27.35
Minor level: 25.78 **
Major level: 25.00
Minor level: 24.22
Minor level: 22.66
Major level: 21.88
Minor level: 21.10

The VIX closed at 27.61. For the day, the VIX closed 1.78 points higher.

The VIX got as high as 31.18 before pulling back.

Watch the minor 27.35 level today.. If the VIX can hold this level, I would expect a test of 28.13.

The midband is now 26 and the VIX is above it, so it should be support. A break under the midband and the VIX should head lower.

Technical support is also right around 27.

S & P 500:

Major level: 3,593.60
Minor level: 3,554.55
Minor level: 3,476.45
Major level: 3,437.40
Minor level: 3,398.35 **
Minor level: 3,320.25
Major level: 3,281.20 <
Minor level: 3,242.15 **
Minor level: 3,164.00
Major level: 3,125.00
Minor level: 3,085.95
Minor level: 3,007.85
Major level: 2,968.80

The S & P closed at 3,281.11. The S & P broke under the major 3,281.20 level and managed to rally to close right at the level.

For the market to drop, it will need to close under 3,242.15. And the market did fall under this level as well, before recovering.

Watch to see if the S & P can hold the major 3,281.20 level. If it can, I would expect a run up to 3,320.25.

At 3,315 there is an open gap, which could provide resistance.

3,389 is the midband on the 60 minute chart and the S & P should open below it. This level should now become resistance.

The short term 60 minute has turned bearish.

QQQ:

Minor level: 289.06
Major level: 287.50
Minor level: 285.94
Minor level: 282.81
Major level: 281.25
Minor level: 279.69
Minor level: 276.56
Major level: 275.00
Minor level: 273.44
Minor level: 270.31
Major level: 268.75
Minor level: 267.19 **
Minor level: 264.06
Major level: 262.50
Minor level: 260.94
Minor level: 257.81
Major level: 256.25

The QQQ closed at 267.51. The QQQ closed 1.03 higher.

Watch the 267.19 level. A close today under this level and the QQQ should test 262.50. But, if the QQQ can hold this level, it should continue higher.

The QQQ broke under the midband on the 60 minute chart. That price level is 278 and should now be resistance.

Like the S & P, the QQQ has crossed into a downtrend on its 60 minute chart.

IWM:

Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
Minor level: 154.70
Minor level: 151.56
Major level: 150.00 <
Minor level: 148.44 **
Minor level: 145.31
Major level: 143.75
Minor level: 142.19
Minor level: 139.06
Major level: 137.50
Minor level: 135.94

The IWM closed at 147.92, closing 5.37 lower. The IWM took out the 150 objective and had the largest drop of all the major markets.

A close today under 148.44 and the IWM should drop to 143.75/

Having said that, the IWM is just above the midband on the daily chart, which is 146.60. This should be support.

TLT:

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
Minor level: 164.85 **
Minor level: 163.28
Major level: 162.50 <
Minor level: 161.72
Minor level: 160.16
Major level: 159.38

The TLT closed at 164.40. The 164.85 level is the key short term level. And with a close today under it, the TLT should drop to 162.50.

To move higher, the TLT needs to recoup the 164.85 level. If not, a drop to 162.50 would be expected.

The 165 area is still technical resistance.

Short term charts remain bearish.

GLD:

Major level: 190.63
Minor level: 189.85
Minor level: 188.28
Major level: 187.50
Minor level: 186.72
Minor level: 185.16
Major level: 184.38
Minor level: 183.60
Minor level: 182.03
Major level: 181.25
Minor level: 180.47 **
Minor level: 178.91
Major level: 175.00

The GLD closed at 179.52. The GLD closed 3.68 lower on the day.

A close today under 180.47 and the GLD should drop to 175. Watch this level today.

Short term momentum has turned bearish. The technical resistance level is now around 182. If the GLD can clear 182, it should head higher.

XLE:

Minor level: 41.41
Major level: 40.63
Minor level: 39.83
Minor level: 38.28
Major level: 37.50
Minor level: 36.72
Minor level: 35.15
Major level: 34.37 < HIT
Minor level: 33.59
Minor level: 32.03 **
Major level: 31.25
Minor level: 30.47
Minor level: 28.90
Major level: 28.12

The XLE closed at 31.97. The XLE is right at the major 31.25 level. Watch to see if the XLE can hold this level.

Short term the XLE is oversold. It did move above the lower band on the 60 minute chart, which is now 31.90. This should be support on a retest.

Looking for a bounce, which we are getting. Technical support is around 31. Looking for a move up to the 36 area.

AAPL:

Minor level: 140.63
Major level: 137.50
Minor level: 134.38
Minor level: 128.13
Major level: 125.00
Minor level: 121.88
Minor level: 115.63
Major level: 112.50 <
Minor level: 109.13 **
Minor level: 103.13
Major level: 100.00

Apple closed at 110.08. Apple managed to close $3.24 higher.

And watch the 109.13 level for resistance. If Apple can hold this level, it should continue higher.

Apple broke under the midband on the 60 minute chart. That level is 116 and should be resistance. Apple has crossed into a downtrend on the 60 minute chart. Short term momentum is bearish.

WATCH LIST:

Bullish Stocks: CHTR, ZM, AVGO, FDX, PODD, MCD, DE, DG, UNP, MMM, EDU, CAT, TT, ALXN, GH, Z, ALB, PGR, EMN, PENN, SWAV

Bearish Stocks: BDX, WAT, GS, GD, HSY, CB, TRV, CYBR, MIDD, DLTR, ADC, HSIC, UPRO, KRC, THS, HXL