May 19, 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 suggested you sell the IQ position. This was primarily because they reported earnings last night. The sale, along with the expired call option, resulted in a 6% return for 10 days.

With IQ trading lower pre open, closing ahead of earnings proved to be the best strategy.

The S & P 500 had a massive move yesterday based on preliminary trial for a COVID-19 vaccine.

The S & P closed 90.21 points higher for the day. The market closed at 2,953.91.

And yesterday's high of 2,968.09 virtually hit our upside objective of 2,968.80 to the tick. Close enough to say the target was achieved.

This also put the S & P above the 61.8% retracement level, which is 2,934.49. So, at this point, this level should now be support.

The intra day range was 54.23 points. This was only due to the fact that the market gapped 50.16 points at the open.

This now puts the daily average true range at 75.35 points.

The support area from yesterday's daily bar is in the 2,934 to 2,941 area.

And with the daily bar closing at 97% of the range for the day, we would expect the high to be violated before the low.

At this point, the key upside resistance is at the midband on the daily price bar.

That price level is 2,982.42.

Yesterday's high went to within 14.33 points of the midband. How the market reacts at this level should tell us what the next move for the market will be.

As you know, when approaching the midband from below on the first attempt, it should be resistance. If the S & P does clear the midband, it would suggest the market will head even higher.

Knowing this level will tell us what to expect.

Pre open, the market is trading about 6 points lower.

HD reported and is trading about $3.80 lower.

The week ends with NVDA, PANW, and SPLK reporting on Thursday.

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
Major level: 25.00

The VIX closed at 29.30. The VIX dropped 8.12% yesterday.

And yesterday was the first close under 30.47. A close today under this level and the VIX should drop to 28.13.

At this point, 31.25 should be resistance.

Look for technical resistance around 32.

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 2,953.91. The S & P will need to clear the major 2,968.80 level to head higher. And of course the midband.

The minor 2,929.75 level should be support.

And technical support should be around 2,875.

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 227.43. The QQQ closed 4.16 points higher.

This was the first close above 226.56. A close today above this level and the QQQ should move up to 231.

Support from yesterday's daily price bar should be in the 227 area.

The minor 226.56 level should be support.

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
Minor level: 120.31
Major level: 118.75

The IWM closed at 132.68. The IWM will need two closes above 132.81 to move up to 137.50.

131.25 should be support now. And the 126 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
Minor level: 158.60
Minor level: 157.03
Major level: 156.25
Minor level: 155.48

The TLT closed at 163.05. The TLT hit the 162.50 level. At this point, it will need two closes under 161.72 to drop to 158.

And to move higher, the TLT will need to close above 163.28.

The 166 area should be technical resistance.

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 162.69. The GLD failed to close above 163.28. Watch to see if the GLD can hold 162.50 today.

And two closes under 161.72 and the GLD should drop to 159.

Technical resistance is around 163.

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 38.93. The XLE closed above 38.28 for the first time. A close today above this level and the XLE should test 40.63.

Technical support should be around 37. And resistance at the 42 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 314.96. Watch the 315,63 level. Two closes above this level and Apple should move up to 325.

The minor 312.50 level should be support.

The 309 area should now be support.

WATCH LIST:

Bullish Stocks: SHOP, REGN, NFLX, DPZ, HUM, NVDA, VRTX, RNG, LULU, WST, COUP, ZM, KLAC, SMG, BAND, MRNA, CHGG, AZN

Bearish Stocks: PSA, HSY, CAT, FDX, CB, AIZ, UPS, EXR, NTRS, ED