July 15, 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.

Yesterday I did suggest a short term debit spread on the QQQ. The idea was to buy the $257 call for next week and sell the $263 call against it. I will be looking to close this position today, so look for an alert later today.

The market managed to find support and reverse back to the upside.

The S & P 500 closed 42.30 points higher, erasing the losses from Monday. The market closed the day at 3,197.52.

And the range for the day was 73.29 points, which exceeded the daily average true range by 20%. The daily average true range now stands at 60.93 points.

And the daily price bar closed at 95% of the range for the day. This does suggest that yesterdays high of 3,200.95 should be violated before the low of 3,127.66.

Pre open trading is certainly proving that point, with the S & P trading 39 points higher based on positive news for a Covid-19 vaccine.

Assuming this trading holds up through the open, the market should open around 3,236 or about 36 points above yesterdays high.

This would suggest that yesterday's high should be support on a sell off. Also, the 3,218 area should be support as well.

Yesterday's price action followed the close percentage from Monday. With the market closing at 7% of the range of the bar on Monday, the expectation was that the low from Monday would be violated before the high.

And after gapping lower at the open yesterday, the S & P proceeded to sell off and take out Monday's low.

Yesterdays low of 3,127.77 took out Mondays low by 21.77 points.

From that point, the market rallied just under 70 points into the close.

As it turned out, yesterday's low was 2.66 points above the major 3,125 level, which should be support after having been violated.

And the S & P managed to close 33.52 points above the minor 3,164 level.

Here is a fun fact based on our price levels.

If you measure the range from 3,164 to the low of 3,127.66, you get 36.34 points.

The low stopped 2.66 points above the major 3,125 level.

If you subtract 2.66 from 36.34, you get 33.68. When you compare that figure to the distance from 3,164 to the close, you get 33.52.

The difference is within 16 cents of each other.

I always like to point out these symmetries when they occur. As you know, they have happened in the past.

GS reported last night and is trading about $9.80 higher in the pre market.

Tomorrow morning, we get earnings from BAC and DPZ, along with MS.

And Thursday, after the close we get earnings from NFLX.

Here are the Key Levels for the Markets:

$VIX:

Major level: 37.50
Minor level: 36.72
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

The VIX dropped 8.29%, giving back about half of the move from Monday. It closed at 29.52, down 2.67 on the day.

This put the VIX back under the minor 30.47 level. This down implies that if the VIX closed under 30.47 today, it should test 28.13.

This also put the VIX under 30.10, which is the midband on the 60 minute chart. This level should now be resistance.

And there is a support level at 29. So, watch if the VIX breaks this. If it does, it should continue lower.

S & P 500:

Major level: 3,281.20
Minor level: 3,242.15
Minor level: 3,164.00 **
Major level: 3,125.00 < Hit
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
Major level: 2,812.50
Minor level: 2,773.45
Minor level: 2,695.35
Major level: 2,656.30

The S & P closed at 3,197.52. The S & P closed back above the minor 3,164 level.

By recouping 3,164 this now suggests that if the S & P can close above this level today, it should head up to 3,281.

Short term charts remain bullish, so I am biased for a reversal to the upside which of course happened yesterday.

Technical support is around 3,170.

QQQ:

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
Minor level: 251.56
Major level: 250.00
Minor level: 248.54
Minor level: 245.31
Major level: 243.75

The QQQ closed at 260.37. This put the QQQ back to within 1 point of the upper band on the daily chart.

The upper band is now 261.51. This is a key level to watch. If the QQQ can take it out, it should head higher.

Watch the minor 260.93 level. I would expect a move above it today.

Technical support is also around 258.

IWM:

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 < Hit
Minor level: 135.94
Minor level: 132.81
Major level: 131.25

The IWM closed at 141.83. This was the second close above 139.06. Biased for a test of 143.75.

Technical resistance is now around 141, and the IWM closed just above it. This level should be support now.

TLT:

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
Minor level: 158.60
Minor level: 157.03
Major level: 156.25
Minor level: 155.47

The TLT closed at 167.12. Biased for a test of 168.75, but with the market up so sharply pre open, I would expect a pullback.

165.63 should now be support. Watch this level. A break under
his level and the TLT should head lower.

167 is a minor technical support level. A break under this and the TLT should head lower.

GLD:

Major level: 171.89
Minor level: 171.11
Minor level: 169.54 **
Major level: 168.75 < HIT
Minor level: 167.98
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 GLD closed at 170.19. The objective for the GLD should be up to 171.89. The GLD is within 69 cents of the objective.

The minor 167.98 level should be support.

Technical support should still be at 169.

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 Target
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 36.59 The objective for the XLE should still be to 37.50.

The 36 area should be technical support.

And technical resistance is around 39.

AAPL:

Major level: 400.00
Minor level: 396.88
Minor level: 390.63 **
Major level: 387.50 < Hit
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 388.23. Apple closed 6.32 higher on the day.

Apple is back above the major 387.50 level. The next minor level is 390.63.

And technical support is around 385. 398 is now the upper band on the daily chart.

WATCH LIST:

Bullish Stocks: AMZN, TSLA, GOOGL, SHOP, REGN, NFLX, NTES, ADBE, DXCM, NVDA, DPZ, AAPL, LRCX, COUP, VRTX, WIX

Bearish Stocks: ORLY, LMT, MA, NOC, CTAS, ULTA, MCD, BURL, SYK, MMM, AAP, ZBH, IBM, HS, CVXADS, FTDR, FANG, DIN, AJRD, FUN, HFC