August 12, 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 fulfilled the close percentage projection from Monday by making a new high before selling pressure came in.
And market opened at 3,370.34, gapping to the upside almost 10 points. From there, the S & P ran up to a high of 3,381.01.

This took out Monday's high by almost 18 points.

After topping out at 3,381.01, the S & P sold off for the next two and one-half hours.

The market dropped to a low of 3,326.44. This was a drop of 54.67 points.

The range was actually 132% of the daily average true range, which is 41.24 points.

Couple of points to make.

The first is that yesterday made a new high as anticipated by the 90% close percentage on Monday.

The second point is that there was a range expansion. Yesterday happened to expand after 6 consecutive days of contractions. The last time a daily ranh=ge exceeded the daily average true range was on July 31st.

You will usually see an expansion after 7 to 10 days of contractions. And last week closed with 7 consecutive weekly contractions.

This suggests to me that we well see a weekly range that exceeds 145 points, which is the weekly average true range.

So far this week, the range is 55 points, so it does suggest we could see a 90 point move above the high or below the low.

Yesterday closed at 13% of the range of the daily bar. This does suggest that low should be violated before the high.

And the resistance level from yesterday is in the 3,352 to 3,354 area.

Pre open, the S & P is trading about 23 points higher. This would project to an open around 3,356 or just above the resistance area. Watch to see if the resistance area can hold.

Also, watch the midband on the VIX, which is 25.10. If the VIX cannot clear this level, it should head lower. And that would suggest the market should continue higher.

The support area from last week is in the 3,318 to 3,320 area.

Earnings are slowing down. This week we get earnings from CSCO and LYFT on Wednesday, after the close.

BABA and NTES report Thursday, before the open.

And BIDU reports Thursday after the close.

The support area from the July monthly price bar is in the 3,188 to 3,190 area.

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 Midband
Minor level: 24.22
Minor level: 22.66 **
Major level: 21.88 < HIT
Minor level: 21.10 **
Minor level: 19.53
Major level: 18.75

The VIX closed at 24.03. The VIX closed 1.90 points higher for the day.

Watch the 22.66 level on the downside and 25 on the upside. As I mentioned above, the midband is right around 25 and should be resistance.

A break under 25 and the VIX should continue lower.

Technical resistance is around 25.

S & P 500:

Major level: 3,437.40 < TARGET
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
Minor level: 2,929.75
Minor level: 2,851.65

The S & P closed at 3,333.69. The target for the S & P should still be up to 3,437.20.

And the minor 3,320.25 level should be support. Minor resistance is at 3,359. Watch to see if the S & P can hold 3,359, after closing just above it. If it can, it should continue its bull move.

Technical support is around 3,335.

QQQ:

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: 267.18 **
Minor level: 264.05
Major level: 262.50
Minor level: 260.93
Minor level: 257.80
Major level: 256.25
Minor level: 254.69

The QQQ closed at 265.19. The QQQ closed 5.12 lower on the day.

Watch the minor 267.18 level. A close under this level and the QQQ should drop to 262.50.

If the QQQ can trade above 267, it should then be support.

The upper band is now 278.13.

268.75 should be support. And technical support is around 261.

IWM:

Major level: 162.50
Minor level: 160.94
Minor level: 157.81 **
Major level: 156.25 HIT
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 156.88. The next minor level is 157.81. Two closes above this level and the IWM should head up to 162.50.

156.25 should be support. And 154.70 as well.

And support should be at the midband, which is 145.93. The IWM is moving away from the midband. Next target should be the upper band, which is 187.

The IWM is at the upper band on the 60 minute chart, which is 159.41. Short term the IWM is overbought a pullback should be coming. Pulled back as expected.

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

The TLT closed at 167.10, closing 2.01 lower. A close today under 167.97 and the TLT should drop to 165.63.
A break under this and the TLT should continue lower.

165.63 should be resistance.

The 169 area is technical resistance.

GLD:

Minor level: 194.54
Major level: 193.76
Minor level: 192.98
Minor level: 191.41
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

The GLD closed at 179.94. The GLD closed $10.21 lower on the day.

This is not unexpected, as I wrote this yesterday: "The GLD is now overbought and a pullback is possible. And is pulling back as expected. And it pulling back as expected."

To move lower, the GLD will need two closes 189.85.

The upper band is now 185.17 and the GLD closed under it. This level should now be resistance.
The 175 area should offer support. And technical resistance is around 187.

XLE:

Minor level: 44.53
Major level: 43.75
Minor level: 42.97
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

The XLE closed at 38.20. The XLE will still need two closes above 38.28 to move higher.

37.50 should be support. And technical support is around 37 as well.

AAPL:

Major level: 400.00
Minor level: 396.88
Minor level: 390.63
Major level: 387.50
Minor level: 384.38
Minor level: 378.13 **
Major level: 375.00 <
Minor level: 371.88
Minor level: 365.63
Major level: 362.50
Minor level: 359.38
Minor level: 353.13
Major level: 350.00
Minor level: 346.88

Apple closed at 437.50. Apple closed $13.41 lower.

Apple is still above the upper band on the daily chart. The upper band is 434.09. This should be support until a close under it.

Apple sold off from above the upper band on the 60 minute chart. The upper band is 464.03. And should now be resistance.

I would like to see a larger pullback before entering.

WATCH LIST:

Bullish Stocks: AMZN, CHTRM NTES, NVDA, AAPL, ROP, DXCM, HUM, COST, MA, W INTU, WST, HD, FB, BABA, KLSC, CMI, PYPL, ITW

Bearish Stocks: STZ, CDW, BAX, HAE, RL, VLO, BX, HQY, MU, WDC, HFC, FL, CLR