July 7, 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 suggested selling the July $15 call against the PRA position. This brings the premium collected to $0.80 per share. As always, you should only sell the calls if you own shares in PRA.

The S & P continued the July 4th rally, closing 49.71 points higher.

The day closed out at 3,179.72. And the daily price bar closed at 89% of the range of the bar.

This high close percentage does suggest that the bias is still to the upside.

And the support area from yesterday's daily price bar is in the 3,167 to 3,169 area.

And this was the first close above the minor 3,164.00 level. This does suggest that it should now be support on a sell off and if the market can close above it today, we would expect the market to move higher.

Having said that, there are two bearish factors from yesterday.

The first is that the intra day range was only 27.30 points. If you measure the close to close relationship, it was 49.71 points. This, of course, was due to the bullish price gap at the open.

Both of these ranges were less than the daily average true range, which is now 61.32 points.

And the second fact is that both the S & P and the VIX closed higher.

This is a divergence and often signals that a change in direction is forthcoming.

And pre open, the S & P is trading about 17 points lower.

This projects to an open around 3,163. This would project an open about one point below the minor 3,164 level.

Watch the 3,164 level today. This should be a key level. If the S & P can hold this level, I would expect it to move higher.

A failure to hold this level and I would expect more selling pressure to come in.

The short term intra day charts still remain bullish, so I would expect support to come in.

The support area from last week's weekly price bar is in the 3,074 to 3,082 area. And should still be valid.

The support area from the monthly price bar is around 3,100 and should still be valid.

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 closed at 27.94. It closed .26 higher on the day. This was the second close under the major 28.13 level.

This would still suggest that 28.91 should be resistance and two closes under 27.35 and the VIX should drop to 25.

And technical resistance is at 30. The 60 minute chart is still bullish, but is close to crossing into a downtrend. If the 60 minute does cross into a downtrend, it would suggest the market will continue higher.

As I mentioned above, the VIX and the S & P did diverge yesterday.

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 3,179.72. Watch the minor 3,164 level today.

This level should be support on a pullback. And a close today above 3,164 and the S & P should test 3,281.20.

Technical support is around 3,148.

QQQ:

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
Minor level: 242.15
Minor level: 239.00
Major level: 237.50

The QQQ closed at 258.39. The QQQ closed just above the minor 257.80 level.

The QQQ cleared the 256.25 level we were looking for. This would now suggest that 254.69 should be support.

Technical support is around 254. The QQQ did clear the upper band on the daily chart. The upper band is 255.94 and the QQQ is now above it. This level should now be support.

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 143.43. The IWM will need to clear the major 143.75 level to move higher.
Also, the IWM is right under the midband on the daily chart. The midband is 146.39 and yesterday's high went to exactly 146.39.

As you know, this is a key level and a failure to clear the midband and the IWM should pullback.

Technical support is around 142.

TLT:

Major level: 165.63
Minor level: 164.85
Minor level: 163.28 **
Major level: 162.50 < Hit
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
Minor level: 153.91
Major level: 153.13

The TLT closed at 162.92. The TLT cleared the major 162.50 level, but could not close above the minor 163.28 level.

Support is still around 162, which is the midband on the 60 minute chart.

A break under 162 and the TLT should head lower. And if 162 can hold, look for a push higher.

GLD:

Major level: 168.75
Minor level: 167.98
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
Major level: 159.38
Minor level: 158.60
Minor level: 157.03
Major level: 156.25
Minor level: 155.47

The GLD closed at 167.98. The GLD closed exactly on the minor 167.98 level. The objective for the GLD should still be to 168.75.

The major 165.63 level should be support.

Technical support should be at 167.

XLE:

Minor level: 47.65
Major level: 46.88
Minor level: 46.09
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: 34.27

The XLE closed at 37.45 The XLE needs to clear the major 37.50 level to head higher.

To move higher, the XLE will need two closes above 38.28.

The midband on the 60 minute chart is now 39 and the XLE is below it. This should now be resistance. This level is 39 and the XLE will need to clear it to head higher.

The 37 area should be support.

AAPL:

Major level: 387.50
Minor level: 384.38
Minor level: 378.13
Major level: 375.00 < Hit
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
Minor level: 340.63
Major level: 337.50

Apple closed at 373.85. Apple closed 9.75 higher for the day.

The 375 level was hit, with Apple hitting a high of 375.78.

The 371.88 level should be support. And watch to see if Apple can clear 375.

Technical support is around 369.

WATCH LIST:

Bullish Stocks: AMZN, TSLA, SHOP, REGN, NFLX, ADBE, NOW, NVDA, ASML, ILMN, AAPL, LRCX, AMGN, WIX, VEEV, WST

Bearish Stocks: BYND, PNC, MMS, COF, CLUE, RAMP, AMBA, XOM, ADS, FTDR, FANG, DIN, AJRD, FUN, HFC