May 13, 2020 - MDT Pro Tips A.M.

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 an uneven straddle on the SPY. The reason for this was that I believe the market is at a key inflection point. And with the contractions we have been seeing, the next move could be rather large.

And as it turned out, just after the alert went out, the market dropped sharply.

For the day, the S & P 500 closed 60.07 points lower. The S & P closed out at 2,870.12.

The S & P did make a higher high, hitting 2,945.82, taking out Monday's high of 2,944.25 by about a point.

From the high, which hit right off the open, the market sold off the balance of the day.

No doubt, the sell-off was fueled by the country's infectious disease expert testifying that opening the country too soon could potentially see a second wave of coronavirus cases.

Regardless of his testimony, we know the S & P has been flirting with the 61.8% retracement level of the downswing.

That price level is 2,934.49 and for two days, the S & P managed to clear this level by about 11 points.

The other key level just above the 61.8% level is the midband on the daily chart, which is now 2,981.96.

These are the inflection points I mentioned above.

And with the contractions, the odds favor a large move. The question is which direction?

The odds favor a move lower and yesterday's daily bar closed at just 1% of the range of the bar.

This does suggest that the market will follow through to the downside and yesterday's low should be violated before the high.

The resistance level from yesterday's daily bar is in the 2,905 to 2.908 area.

The key now will be to see if the weekly support level can hold.

The support area from last week's weekly price bar is in the 2,865 to 2,872 area.

Yesterday closed at 2,870 or right in the middle of the support level.

Pre open, the S & P is trading about 8 points higher. This projects to an open around 2,877 or about 5 points above the upper end of the weekly support level.

Watch to see if the weekly support level can hold on a sell off.

And if yesterday's low is violated, look for it to be resistance.

BABA reports Thursday before the close. And WIX also reports Thursday before the close.

Here are the Key Levels for the Markets:

$VIX:

Minor level: 39.84
Minor level: 38.28
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

The VIX closed at 33.04. The VIX jumped almost 20% yesterday.

This put the VIX just above the minor 32.03 level. This suggests that if the VIX closes above 32.03 today, it should test 34.38.

If the VIX breaks the 34.38 level, it would tell us the market should continue lower.

The 38 area is technical resistance. And technical support is around 30.

S & P 500:

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 2,870.12. This put the S & P below the minor 2,929,75 level. This now suggests that this level should be resistance and if the S & P closes under this level today, it should drop to 2,812.

Technical support is around 2,830. And technical resistance is around 2,896.

QQQ:

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
Minor level: 210.93
Minor level: 207.81
Major level: 206.25
Minor level: 204.69
Minor level: 201.56

The QQQ closed at 222.12. The QQQ sold off 4.75 points. And this was the first close under 223.42.

This now suggests that if the QQQ closes under 223.42 today, it should drop to 218.75.

Look for resistance now at the major 225 level.

And resistance from yesterday's daily bar is in the 225 area as well.

IWM:

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
Minor level: 129.69 **
Minor level: 126.56
Major level: 125.00
Minor level: 123.44

The IWM closed at 126.97. The IWM took out the 132.81 and sold off to almost the 126.56 level.

This now suggests that the minor 129.69 level should be resistance. And a close today under this level and the IWM should test 131.25.

At this point, the IWM will need two closes above 132.81 to move higher.

Technical support is around 129.

TLT:

Major level: 169.53
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: 155.48

The TLT closed at 164.37. At this point, if the TLT can close above 163.28 today, it should test 165.63.

162.50 should be support.

The 164 area should be technical resistance. It needs to clear this level to head higher. And if it does, it should continue higher.

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 <
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 160.04. The next minor level on the upside is 160.16. And on the downside, the level is 158.60. The GLD still needs two closes above 160.16 to move up to 162.50.

Technical resistance is around 160. And the GLD needs to clear this level to head higher.

The 158 area is technical support.

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 37.43. The XLE closed just under the major 37.50 level. 38.28 should be resistance.

Two closes under 36.72 and the XLE should head down to 34.27.

Technical support should be around 36. And resistance at the 38 level.

AAPL:

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
Minor level: 296.88
Minor level: 290.63
Major level: 287.50
Minor level: 284.38
Minor level: 278.13
Major level: 275.00

Apple closed at 311.41. Apple got as high as 319.69 before selling off.

With a close under 312.50, the minor 315.63 level should be resistance.

Watch the 309.38 level on the downside.

The major 312 level should be support.

The 305 area should offer technical support. And technical resistance is around 317.

WATCH LIST:

Bullish Stocks: GOOGL, SHOP. CHTR, DXCM, NOW, ADBE, NVDA, AAPL, RNG, AAPL, ZBRA, CLX, COUP, AGN, MSFT, ADSK, CRM

Bearish Stocks: WBA, PINC, LX, RESI, LC