August 31, 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.

Friday, HPQ settled at $19.85 or 85 cents abvoe the $19 strike price. Because of the push after reporting, I suggested you let the calls be assigned.

The result was that the calls should have been assigned and your stock sold at $19.
This resulted in a return of 4.6% for 5 days. If you traded the suggested 400 share lot, the cash return was $348 for the week.

The S & P 500 managed to close 23.46 points higher on Friday. The week clsoed out at 3,508.01.

This was the first close above the 3,500 level. And of course, a new high. But, I said I did expect a new high on the last webinar that I did with John.

This was because at the time, the S & P still had an objective higher that where the market was trading.

At that time, the objective for the S & P was to the 3,437.40 level.

Not only was that objective achieved, but the S & P has now had two closes above the next minor level, which is 3,476.45. We have actually had three closes above this level.

So, what does this mean for the market?

Well, at this point, the active objective is now up to the 3,593.60 level.

Friday's high of 3,509.23 is only 84 points away from that objective.

And Friday closed at 95% of the range of the daily bar. This does suggest that the high should be violated before the low. And pre open, the S & P is trading about one point lower.

Support from Friday's daily bar should be in the 3,495 to 3,500 area.

For the week, the S & P closed 110.85 points higher. This was the fifth consecutive week of higher closes.

And the weekly bar closed at 98.7% of the range of the weekly bar. This also suggests that the weekly high of 3,509.23 should be violated before the low of 3,413.13.

The support area from last week's weekly price bar should be in the 3,461 to 3,463 area.

The range for the week was only 96.10 points, which was 73% of the weekly average true range, which is now 131 points.

This meant that last week was the 10th consecutive range contraction on the weekly time chart.

The implication is that we should see a range expansion.

This week, we do get earnings, although the companies reporting are slowing down as the season winds down.

This afternoon, we get earnings from ZM. Wednesday after the close, we hear from CRWD.

And Thursday, after the close, we get earnings from AVGO, DOCU and RH.

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
Minor level: 21.10
Minor level: 19.53
Major level: 18.75

The VIX closed at 22.96. The VIX closed 1.51 points lower for the day.

Friday's high was 26.30, which was just above the midband on the daily chart, which is 25.28. The VIX sold off after getting just above the midband.

As I have been pointing out, the midband should be resistance.

At this point, if the VIX can close under 24.22, the VIX should drop to 21.88. Technical resistance is at 24.

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 3,508.01. The objective should still be up to the 3,593.60 level.

This suggests that the 3,476.45 level should be support. And support is at 3,457.

Technical support is arouond 3,485.

QQQ:

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

The QQQ closed at 292.53. The QQQ closed 1.48 higher on the day.

The upper band, which is 291.11. With the QQQ above this level, it should be support. And the QQQ has now had two closes 289.06 and the objective should be up to 293.75.

Technical support is around 292.

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 157.12, closing 1.32 higher. The IWM closed above the 156.25 level, as expected.

Look for a run to the upper band on the 60 minute chart, which is 165.

Technical support is around 155. Watch to see if the IWM can close above 157.81.

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 Target Hit!
Minor level: 161.72 **
Minor level: 160.16
Major level: 159.38

The TLT closed at 161.12, closing .12 lower. Objective should now be down to 159.38.

Technical resistance is now around 162. Short term trends remain bearish. But, short term the TLT is oversold and bounce should be expected.

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 HIT
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 184.39 The GLD closed 3.15 higher in the day. This brings the GLD to the major 184.38 level.

With two closes under 180.47, the GLD should drop to 175.

The upper band is 191.55 and should now be resistance.

The 183 area should be a technical support level.

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 36.44. The objective should be down to 34.37.

Watch to see if the XLE can hold the 34.37 level.

Technical resistance is at 36. And technical support should be around 35 as well. Short term, the XLE it oversold and I do expect a bounce.

AAPL:

Major level: 412.50
Minor level: 409.38
Minor level: 403.13
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

Apple closed at 124.80. Apple closed .20 lower.

The 4 for 1 split is now in effect. 125 is technical support. I will rerun and update the support levels.

WATCH LIST:

Bullish Stocks: AMZN, TSLA, GOOGL, NVDA, AAPL, NTES, LULU, MA, COST, INTU, AVGO, RH, ZM, FB, BABA, HD, CRM, WDAY, V, MSFT, DE, KLAC, PYP:

Bearish Stocks: BDX, MLM, ATO, ES, DUK, AEP, EHTH, CMS, WUBA, HES, KEX