August 13, 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 reversed all the losses from Tuesday with a gain of 46.66 points. The market closed out at 3,380.35.

The intra day range was only 32.43 points. But, the market did gap up 21.77 points at the open.

I have been writing about the close percentage and the price expectation for the next day.

And Tuesday, the S & P closed at only 13% of the range for the day. This put the odds of violating the low before the high.

But yesterday, that did not happen. And the question becomes why not?

As I mentioned in yesterday's update, the market was trading higher. In fact, I wrote this:

"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 key was to see if the resistance level would hold as support. As it turned out, the low for the day yesterday was 3,355.46 or just above the resistance level I mentioned. In other words, the previous resistance level became support.

The other key yesterday was the VIX. I have been writing about the fact that the VIX is just under the midband on its daily chart.

And now that it is under the midband, it should be resistance. That level is 25.11. As it turned out, the VIX did stay below the midband and formed an inside day.

This is another example of where support becomes resistance.

Support from yesterday's daily bar is in the 3,368 to 3,372 area.

Pre open, the S & P is trading about 3 points lower.

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

LYFT did report and is down about 50 cents. CSCO reported and is trading about $3.20 lower.

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 22.28. The VIX closed 1.76 points lower for the day.

With an inside day yesterday, watch for a violation of the high or the low. The high was 22.88 and the low was 21.54.

The minor 24.22 level should be resistance. And the midband, which is 25.11 should also be resistance.

Technical resistance is around 23.

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 3,380.35. The target for the S & P should still be up to 3,437.20.

The S & P came to within 5.63 points of the all-time high. And with objectives above the high, I do expect it to be taken out.

And the minor 3,320.25 level should be support. Minor resistance is at 3,359. The 3,359 level should now be support.

Net minor level on the upside is 3,398.35.

Technical support is around 3,375.

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 271.86. The QQQ closed 6.67 higher on the day.

Watch the minor 270.31 level. A close above this level and the QQQ should test 275.00.

If the QQQ can trade above 267, it should then be support. And the major 238.75 level should be support as well.

The upper band is now 278.97.

Technical support is around 271.

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 157.52. 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 145.98. The IWM is moving away from the midband. Next target should be the upper band, which is 187.

The IWM pulled back the upper band on the 60 minute chart, which is 160.59.

Short term the IWM is overbought and pullback should be coming. We may need a bit more of a pullback before it makes another run at the upper band.

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 HIT
Minor level: 164.85
Minor level: 163.28
Major level: 162.50
Minor level: 161.72
Minor level: 160.16

The TLT closed at 165.59, closing 1.51 lower. The TLT already hit the 165.63 level.

At this point, to move lower, the TLT will need two closes under 164.85. To move higher, it will need to hold the 165.63 level.

166.41 should be resistance.

The 166 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
Minor level: 180.47 **
Minor level: 178.91
Major level: 175.00

The GLD closed at 179.10. The GLD closed $.84 lower on the day.

The GLD has now closed under the upper band, which is 185.57. This level should be resistance now.

But, I do expect a test of the upper band at some point.

If the GLD closes under 178.91 today, it should then test 175.

The 175 area should offer support. And technical resistance is around 182.

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 38.58. The XLE managed to close above 38.38. A close today above it and the XLE should head up tp 40.63.

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 452.04. Apple closed $14.54 higher.

This put Apple back above the upper band, which is 436.76. This should be support until a close under it.

By clearing the upper band, it should now be support.

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