June 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.

The short $7.50 call on CLVS expired on Friday. I will be looking to sell more calls this week.

I also suggested you put the PRA position back on with a covered call. PRA does not have weekly options, but the June monthly options are essentially a weekly options with only one week to expiration.

So, at this point, there are two option positions that expire this coming Friday. The short call on PRA and the short $4 call on MFA.

Friday, the S & P 500 bounced from the long range candle from Thursday.

The S & P closed 39.21 points higher on Friday. With the large 188 point drop on Thursday, a bounce on Friday was not unexpected. And a contraction would also be expected.

The range on Friday was 103.95 which was almost 152% of the daily average true range. But, it was still less the 124 point range on Thursday.

And the day closed at 55% of the range of the bar, which is neutral.

For the second day, the S & P closed just above the midband, which is now 2,999.03.

Fridays close of 3,041.31 was about 42 points above the midband.

But pre open, the S & P is trading about 65 points lower. This projects to an open around 2,976.

Not only would the projected open under Friday's low of 2,984.47, but it would also open under the midband of 2,999.03.

This would suggest that the midband would now be resistance. So, watch this level on a rally.

The weekly price bar closed 152.62 points lower. And the price bar closed at 22.9% of the range of the weekly bar.

This suggests that there is about an 80% chance that the weekly low of 2,984.47 should be violated before the high of 3,233.13.

And the 65 point lower projected open, the market should open around 2,976 or about 8 points below the weekly low. So, the close percentage should be satisfied right at the open.

Resistance from last week's weekly bar is in the 3,109 to 3,120 area.

Resistance from Friday's daily bar should be in the 3,036 area.

The question now is how far can this sell off go?

The typical projected pullback is at 50%. And 50% of the last upmove would project to a low of 2,712.

If we project using our resistance levels, a two level drop would put the S & P around 2,921.

A three level drop would go to 2,765.

A retest of the lower band is possible, which is 2,464. A drop to that level is almost a 5 level drop, which is not usual.

What these various pressure points as the market trades.

Finally, I do need to mention that the 60 minute chart for the S & P is still bullish. And the midband on that time frame is 2,968.49. The projected open should be around 2,976 or about 8 points above the midband.

Watch to see if it can hold as support. If it can't, a drop to the lower band, which is 2,660 is possible.

In looking at the bands, we have potential support at the 60 midband and resistance at the daily midband.

Earnings season is winding down and the most notable company reporting this week is ORCL. ORCL reports tomorrow after the close.

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 36.09. It closed 4.7% lower on the day. After the large pop on Thursday, a contraction would be expected.

A close today above 35.16 and the VIX should test 37.50.

The upper band on the 60 minute chart is 42.60 and should be resistance. If the VIX sells off this level, the market should reverse higher.

Support should be around 31.

S & P 500:

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
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 3,041.31. The projected open should be around 2,976 or just under Fridays low of 2,984.

Watch the major 2,968.80 for support. If this level gets violated, look for a move to 2,930.

Watch the midband, which is 2,968.49. This level is right at the major level which should be support as well.

So, if this is violated, the odds favor a move lower.

QQQ:

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
Minor level: 235.91 **
Minor level: 232.78
Major level: 231.22
Minor level: 229.66
Minor level: 226.56
Major level: 225.00

The QQQ closed at 235.88. The QQQ closed just under the minor 235.91 level. A close today under this level and the QQQ should test 231.22.

Resistance should be at the 237.50 level. And resistance from Fridays daily bar is in the 236 to 237.50 area.

The 230 area should offer 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
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 138.27. Watch the major 137.50 level. A break under this level and the IWM should head lower.

The midband, which is now 147, should be resistance.

The IWM is right at the midband on the 60 minute chart, which is 134.20. This should be a support level. A break under it and the IWM should head lower.

TLT:

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
Minor level: 153.91
Major level: 153.13

The TLT closed at 162.30. Watch the 163.28 level on the upside and the 161.72 on the downside.

At this point, support should be at the minor 158.60. And at the 159.38 level.

The TLT is in a downtrend on the 60 minute chart. And the TLT is sitting right under the midband, which is 163.87. Watch how the TLT opens today in relation to the midband.

GLD:

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 GLD closed at 162.62. The GLD closed just above the major 162.50 level. Watch this level today.

At this point, watch the 163.28 level on the upside and 161.72 on the downside.

Technical support should be at 161.

XLE:

Minor level: 47.65
Major level: 46.88 HIT
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 39.82. The XLE closed one cent under the minor 39.83 level. This was the second close under 39.83.

The target for the XLE should be to a drop to 37.50.

The midband on the 60 minute chart is 38.72 Watch to see if the XLE can hold this.

AAPL:

Major level: 350.00
Minor level: 346.88
Minor level: 340.63
Major level: 337.50 **
Minor level: 334.38
Minor level: 328.13
Major level: 325.00
Minor level: 321.88
Minor level: 315.63
Major level: 312.50
Minor level: 309.38
Minor level: 303.13
Major level: 300.00

Apple closed at 338.80. Apple closed just above the major 337.50 level.

Watch the major 337.50 level. A break under this level and Apple should continue to drop.

And technical support is right at the 338 area. A break under this level and Apple should continue lower

WATCH LIST:

Bullish Stocks: AMZN, TSLA, ADBE, DPZ, AAPL, ZM, MSFT, W DG, DOCU, EA, BAND, NKLA, CNNE, ZTO

Bearish Stocks: BDX, VRSN, PEP, MDT, GH, EW, ORCL, THS, FLIR, SAGE, XNCR