July 20, 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.

PRA settled above the $15 strike price. So, the calls should have been assigned.

With the calls sold against the position, the return worked out to 12% for just over one month. If you traded the suggested 400 share lot, the cash return was $680.

DXC did settle under the strike price, so the profit on the short $17 call was booked Friday. At this point, you should have collected $1.20 per share from selling calls.

The week ended with the S & P 500 closing 9.16 points higher. The S & P closed Friday at 3,224.73.

The range for the day contracted for the third consecutive day. The daily range Friday was only 27.97 points. This was about one half the daily average true range.

This does certainly suggest that we will see an expansion in range at some point.

The daily bar closed Friday at 69% of the range for the day, which does suggest that the high should be violated before the low.

The support area from Friday is in the 3,220 area.

For the week, the S & P closed 39.69 points higher. With daily price contracting for three days, the weekly price bar contracted as well.

The weekly range was only 110.62 points. Compared with the weekly average true range of 162.17 points, the range for the week was only 68% of the weekly average range.

The support area from last week's price bar is in the 3,183 area. Above this price level, there is support around 3,215.

Pre open, the S & is trading about 8 points lower. This would project to an open around 3,216 or about 4 points below Friday's midpoint. Watch to see if the market can reclaim the midpoint level.

This week we get earnings from a few of the tech heavyweights.

Wednesday, after the close we hear from ALGN, CMG, MSFT and TSLA.

Thursday morning we get earnings from TWTR and CTXS.

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 Hit
Minor level: 27.35
Minor level: 25.78
Major level: 25.00
Minor level: 24.22

The VIX closed at 25.68. The VIX closed 2.32 points lower for the day.

The low for the day hit 25.41, only 41 cents above the 25 level.

Watch to see if the VIX breaks the major 25 level.

The VIX is now just above the midband on the daily chart. The midband is now 24.54. This as you know, is a critical level to watch.

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 3,224.73. The objective for the S & P should still be up to 3,281.

At this point, support should be at the minor 3,164 level. Also, support should be at the minor 3,203 level.

Technical support is around 3,200.

QQQ:

Major level: 268.75
Minor level: 267.18
Minor level: 264.05
Major level: 262.50 Hit
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 259.42. This was the second close under the minor 260.93 level. This does suggest the QQQ should test 256.25.

The upper band is now 264, which should now be resistance.

The 259 area is the technical support level from Friday.

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 < Hit
Minor level: 142.19
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81
Major level: 131.25

The IWM closed at 146.59. The objectve for the IWM should still be up to 150.

The IWM closed slightly above the midband, which is now 146.02. Watch to see if the IWM can hold this level today.

145.31 should be support.

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 166.78. The objective for the TLT should be up to 168.75.

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

The TLT needs to clear the 167 level to move higher.

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 170.12. With the GLD closing above 169.54, a close today above that level and the GLD should test 171.89.

The minor 169.54 level should be support. And 168.75 should also be support.

Technical support should also 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 - HIT
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 36.69. After hitting the 27.40 target, the XLE has now had its first close under 36.72.

A close today under 36.72 and the XLE should drop to 34.37.

Watch the 36.72 level today.

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 385.31. Apple closed .78 lower on the day. It closed above the minor 384.38 level, which should be support.

This is now the key level. To move higher, Apple will need to clear 387.50.

However, Apple is right at the upper band on the daily chart. That level is 403. This sets up a few price expectations.

And technical support is around 386.

WATCH LIST:

Bullish Stocks: REGN, CHTR, NOW, ILMN, LRCX, ALGN, APD, RH, MKC, CMI, ITW, VRSK, CTXS, TREX, DGX, VRNS, PGR, LOGM

Bearish Stocks: VMW, ADI, AZPN, C, PLAN, APPN, NTNX, SUN