June 4, 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.

Targets on the S & P 500 and the QQQ were hit yesterday!

As you know, the objective we were looking for on the S & P 500 was 3,125, and yesterday's high went to 3,130.94, taking out the target by 5.94 points.

And the objective for the QQQ we were looking for was 237.50. Yesterday's high for the QQQ was 237.47.

OK, I admit it did not hit the target exactly but a 3 cents difference is close enough.

That is great ... but how does this information help to trade the markets?

First, let me say this. If you have been a reader of this update for some period of time, you know that when I lay out objectives and what needs to happen for those objectives to be achieved that they are usually accurate.

Yes, there are situations where the price confirmation fails. But, that is very telling as well.

And we generally know at what level a rally will fail. Or a sell-off in the market will fail as well.

In other words, if upside objectives are being achieved, we expect the market to continue in that direction.

And that is what has been happening during the rally off the bottom on March 23rd.

The resistance levels and the extreme bands become targets for us.

And speaking of the bands, because we now have taken out the midband, it should be support on a sell off.

That level is now 2,991 or 140 points below yesterday's high.

So, if it does not hold as support on a sell off, we would expect price to continue lower.

The second way I use these resistance levels is to measure the ranges that a market moves.

Most countertrend moves go two levels. The major levels are 156 points.

So, if a high was put in yesterday, I would not expect a counter move to drop below 2,818.

A drop below this level would also suggest the market should continue lower.

In the next webinar, I will show how I measure these moves.

Back to yesterday's price action.

For the day, the S & P closed 42.05 points higher. The day closed out at 3,122.87.

The intra day range was 32.04 points. It was smaller than the close to close relationship because of the 18.08 gap open.

The daily bar did close at 75% of the range for the day. This still suggests that yesterday's high should be violated before the low.

And the support area from yesterday's daily bar is in the 3,111 to 3,115 area.

Pre open, the S & P is trading about 14 points lower.

This would project to an open around 3,109 or just under the support area from yesterday.

Watch to see if the S & P can clear the 3,115 area.

Tomorrow, after the close we get earnings from WUBA, AVGO, DOCU, and WORK.

Here are the Key Levels for the Markets:

$VIX:

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 25.66. The VIX closed 1.18 points lower.

The low for the day was 25.04 or 4 cents above the major 25 level.

At this point, look for resistance at 27.35.

Technical resistance is around 28. Wait for the VIX to turn down to initiate any longs in the market.

S & P 500:

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
Minor level: 2,617.25
Minor level: 2,539.06
Major level: 2,500.00

The S & P closed at 3,122.87. The objective of 3,125 was hit. And Support should also be around the 3,047 level.

At this point, support should be at the minor 3,085.95 level. And two closes under this level and the S & P should drop to 2,968.

There is technical support right around the 3,080 level.

Short term charts remain bullish, so I do expect support to come in.

QQQ:

Minor level: 239.00
Major level: 237.50 Hit
Minor level: 235.91 **
Minor level: 232.78
Major level: 231.22
Minor level: 229.66
Minor level: 226.56
Major level: 225.00
Minor level: 223.42
Minor level: 220.31
Major level: 218.75
Minor level: 217.19
Minor level: 214.06
Major level: 212.50

The QQQ closed at 236.69. The target for the QQQ should be up to 237.50.

The major 232.78 level should be support. And the minor 235.91 level should also be support.

Two closes under 235.91 and the QQQ should drop to 231.

And the 235 area should be technical support.

And 236.50 should be support from yesterday's daily bar.

IWM:

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
Minor level: 129.69
Minor level: 126.56
Major level: 125.00

The IWM closed at 144.80. The IWM hit the 143.75 objective.

Watch for support at the 142.19 level. And the IWM would need to close under this level to drop.

The 142 area should be technical 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 Hit
Minor level: 158.60
Minor level: 157.03
Major level: 156.25
Minor level: 155.48

The TLT closed at 159.54. The TLT hit the 159.38 level. The low for the day was 158.94.

To move higher, the TLT would need to close back above 160.16.

And two closes under 158.60 and the TLT should drop to 156.

The TLT is in a downtrend on the 60 minute chart. Resistance on that timeframe is now around 162.

The TLT is oversold and a bounce should be coming.

GLD:

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 Hit
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 159.60. The GLD would still need two closes above 160.16 to move higher. And to move lower, the GLD will need two closes under 158.60.

Watch to see if the GLD can hold the major 159.38 level. If it can't, I would expect movement lower.

Technical resistance is now around 161.

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 < HIT
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 41.73. The XLE took out the 40.63 objective. And it closed above the next minor level.

A close today above 41.41 and the XLE should test 43.75.

39.83 should be support. And the major 40.63 level as well.

And technical support should be around 40.

AAPL:

Major level: 337.50
Minor level: 334.38
Minor level: 328.13
Major level: 325.00 HIT
Minor level: 321.88
Minor level: 315.63
Major level: 312.50
Minor level: 309.38
Minor level: 303.13
Major level: 300.00
Minor level: 296.88
Minor level: 290.63
Major level: 287.50

Apple closed at 325.12. Like most markets yesterday, Apple also hit the 325 objective we were looking for.

The minor 321.88 level should be support. And Apple will need two closes above 328.13 to head higher.

The 320 area should offer support.

WATCH LIST:

Bullish Stocks: GOOGL, TSLA, REGN, HUM, ASML, LULU, VRTX, LRCSm WST, COUP, ADSK, DG, SPLK, ZM, PYPL, DOCU, QLYS,

Bearish Stocks: ROKU, WUBA, FGEN, ARWR, ADSW, GOOS, MOMO