November 19, 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 S & P 500 sold off yesterday. For the day, the S & P closed 41.74 points lower.

The day closed out at 3,567.79

This pullback is not a shock, as I mentioned in yesterday's webinar how the sentiment indicators had reached overbought levels.

The bullish percent index peaked out at 81.4% on November 9th and now reads 75.8%.

The percent of stocks above their 200 day moving average topped out at 89.18% on November 16th.

I show charts of these indicators on the webinars and they are very useful in helping to predict market turns.

They are contraction indicators and the concept is very simple. When all market participants are overly bullish there are no more buyers left to move the market higher.

And when extreme pessimism hits the market, it is usually time to buy.

The range yesterday was 51.76 points. Though this was greater than the range of the previous 6 days, it was still less than the daily average true range, which is now 60.41 points.

This suggests we will see some larger ranges to follow.

The daily bar closed at 1% of the range for the day.

This suggests the odds favor the low being violated before the high.

And the resistance level from yesterday's daily bar is in the 3,590 to 3,593 area.

Pre open, the S & P is trading about 2 points lower.

This suggests the market should open around 3,565.79 or about 1.50 points below yesterday's low.

This means that the close percentage projection should be satisfied at the open.

If the market does continue to drop, I would expect support at the minor 3,554.55 level. To time a long entry, look for a reversal to the downside on the VIX.

NVDA reported and is trading about $8 lower.

Here are the Key Levels for the Markets:

$VIX:

Minor level: 35.16
Major level: 34.38 <
Minor level: 33.60
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

The VIX closed at 23.84. The VIX closed 1.13 points higher. Looking for a bounce up to the 25 level. And I would expect resistance at 25.

Resistance on the VIX should still be at 25.00 and at the 25.78 level.

There should be strong resistance at 28.23. This is the midband on both the daily and 60 minute charts.

Still biased for a move lower. Wait for the VIX to reverse lower to go long.

S & P 500:

Major level: 3,749.80
Minor level: 3,710.75
Minor level: 3,632.65 **
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 3,567.79. The S & P closed 41.74 points lower.

Watch for support at the minor 3,554.55 level. This is the key level to monitor at the moment. Two closes under this level and the S & P should drop to 3,437.

Support under the 3,554 level, should be around 3,541. Also, there is an open gap at 3,538 that should be the lower end of the support.

QQQ:

Minor level: 295.31 **
Major level: 293.75 <
Minor level: 292.19 **
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

The QQQ closed at 290.11. The QQQ closed 2.16 lower.

With a close under 292.19 today, the objective should be to 287.50.

By breaking under the 292.19 level, this should be resistance. Technical support should be around 285.

IWM:

Major level: 187.50
Minor level: 181.25
Minor level: 176.56 **
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
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: 154.70

The IWM closed at 175.96. The IWM closed 2.50 lower on the day.

Support should be at the 173.44 level and the 175 level.

The IWM is selling off from the upper band on the 60 minute chart. That level is 181.28.

174 should be technical support.

TLT:

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 <
Minor level: 158.60 **
Minor level: 157.03
Major level: 156.25
Minor level: 155.47
Minor level: 153.91
Major level: 153.13

The TLT closed at 159.27. It closed .46 higher. The TLT did take out the 159.38 level, hitting a high of 159.57.

The TLT needs to close above 160.16 to continue higher.

The TLT moved to just under the midband on the 60 minute chart. That level now is 159.49. Watch this level. If the TLT clears it, then it should head higher.

GLD:

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 <
Minor level: 174.25 **
Minor level: 172.70
Major level: 171.89

The GLD closed at 175.49. The GLD closed 1.01 lower on the day.

Watch the major 175 level. This is the key at the moment. A break under this level and the GLD should head lower.

The GLD is back under the midband on the 60 minute chart. This level is 178.20 and should be resistance. A drop to the lower band, which is 173 should be the objective.

Technical resistance is around 177 as well.

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 <
Minor level: 33.59
Minor level: 32.03
Major level: 31.25
Minor level: 30.47
Minor level: 28.90
Major level: 28.13

The XLE closed at 35.42. The XLE closed 1.06 lower on the day.

The XLE needs to hold the major 34.37 level to head higher. If it breaks under this level and closes under 33.59, look for a move lower.

Support is at 34.37.

The XLE did close above the upper band on the 60 minute chart, which is now 36.35.

This tells us the XLE is overbought short term and to expect a rally to the upper band after it closed back inside it.

The XLE was overbought and is now pulling back.

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 118.03. Apple closed $1.36 lower.

The objective for Apple should still be up to the 125 level.

And look for support at 115.63. And technical support around 119. A break under 119 and Apple should test 116.

Apple cleared the midband on the 60 minute chart. That level is 116.61 and should now be support. This level should be strong support.

WATCH LIST:

Bullish Stocks: LRCX, ASML, RH, ANTM, RNG, MLM, PEN, ULTA, ACN, CMI, KLAC, V, MCK, CAT, FIVE, ALXN, KEYS, ETN, DVA, ABC, MNST, SHAK,

Bearish Stocks: BIIB, EHTH, INTC, ARCH, SPDN, SUM