November 10, 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.

After the news of a positive Covid-19 vaccine from Pfizer, Inc., the S & P 500 gapped up and made a new all-time high. By the way, this is only one vaccine that has shown promise.

Eli Lilly (LLY) just filed for emergency use from the FDA for their treatment, that also looks promising.

And let's not forget Moderna and the vaccine they are working on.

This all adds up to promising news on the fight against Covid 19. And the prospects of the world returning to some degree of normal.

But the question is what does this do for the markets?

As I mentioned, the S & P 500 raced up to a new high. The high yesterday was 3,645.99. But, the S & P closed almost 100 points below the high.

The day closed out at 3,550.50. And the low for the day was 3,547.49. This resulted in an intra day range of 98.50 points.

The S & P had a massive 73.60 gap at the open. From the open, the market moved up 62.95 points.

So, the market actually had a large range to the downside than to the upside. And the daily price bar closed at 3% of the range for the day.

This does suggest that yesterday's low should be violated before the high.

The high of the gap is 3,521.58 and should be a logical target on the violation of the low.

There are a few divergences that happened over the last few days.

The first, of course, is that the NASD Composite diverted from the S & P and the DOW. While both the S & P and the DOW closed higher, the NASD Composite actually closed lower on the day.

And the NASD has been the market leader but is showing signs of weakening.

The other divergence to note is that on Friday, both the S & P and the VIX closed lower.

And yesterday was the opposite. They both closed higher.

I don't recall that last time I saw this divergence on consecutive days. So, I went back to my statistics and found something interested.

The last time this phenomenon happened was on March 23rd and 24th of this year.

As it turned out, the low for the year was on March 23rd,

But, we have vastly different technical setups. Back in March, the S & P was trading under the lower band on the daily chart.

This time, the S & P is close to the upper band.

The upper band on the daily chart now reads 3,825.89 and the S & P is about 275 points under it.

These VIX and S & P divergences can warn of a change in direction. But, given the fact that the market made a new high, I don't see a change of direction without a retest of the high.

Pre market the S & P is trading about 9 points lower.

This projects to an open around 3,541 or about 6 points below yesterday's low. So, the close projection should be satisfied at the open.

The support area from last week's weekly price bar should be in the 3,404 area. This should be a strong level of support and should be valid all week.

RNG is up about $8 after reporting.

Thursday, we hear from PDD and WIX. And After the close on Thursday, we get earnings from DIS.

Here are the Key Levels for the Markets:

$VIX:

Minor level: 41.40
Major level: 40.62
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 <
Minor level: 24.22 **

The VIX closed at 25.74. The VIX closed .89 points lower.

The VIX closed just under the 25.78 level. And as I mentioned above, it diverged with the S & P.

The VIX is still under the midband on the daily chart. The midband is 27.92 points and should now be resistance. So, watch this level.

S & P 500:

Major level: 3,749.80
Minor level: 3,710.75
Minor level: 3,632.65 **
Major level: 3,593.60 <
Minor level: 3,554.55
Minor level: 3,476.45
Major level: 3,437.40
Minor level: 3,398.35
Minor level: 3,320.25
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

The S & P closed at 3,550.50. The S & P closed 41.06 points higher.

On the downside, watch the minor 3,476.45 level. This should be support. On the upside, the key level should be 3,554.55.

The midpoint is 3,597 and should be a key intra day level. Below this level, there is a support level at 3,566.

The 3,542 area should provide technical support.

QQQ:

Minor level: 295.31
Major level: 293.75
Minor level: 292.19 **
Minor level: 289.06
Major level: 287.50
Minor level: 285.94
Minor level: 282.81
Major level: 281.25
Minor level: 279.69
Minor level: 276.56
Major level: 275.00
Minor level: 273.44
Minor level: 270.31
Major level: 268.75

The QQQ closed at 288.59. The QQQ closed 6.02 lower.

Watch the minor 292.19 level for resistance. And if the QQQ breaks under 287.50, I would expect a further drop.

Support should be at the 286 level.

Like the S & P, the QQQ took out the midband on the 60 minute chart. This level should now be support. The midband is 280.

IWM:

Major level: 175.00
Minor level: 173.44
Minor level: 170.31 **
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
Minor level: 154.70
Minor level: 151.56
Major level: 150.00
Minor level: 148.44

The IWM closed at 169.55. The IWM closed 5.92 higher on the day.

The IWM took out the 168.74 level already.

The next minor level is 170.31 and two closed above this level and the IWM should test 175.

The IWM took out the upper band on the 60 minute chart. That level is 174. Overbought now.

167 should be technical support.

TLT:

Minor level: 169.53
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 HIT

The TLT closed at 156.06. It closed 3.35 lower. The TLT hit the 156.25 level already.

The TLT is oversold and is at the lower band on the 60 minute chart. That level is 154.77.

Looking for a bounce.

159 should be technical resistance.

GLD:

Minor level: 188.28
Major level: 187.50
Minor level: 186.72
Minor level: 185.16
Major level: 184.38 <
Minor level: 183.60
Minor level: 182.03
Major level: 181.25
Minor level: 180.47
Minor level: 178.91
Major level: 175.00 <
Minor level: 174.25
Minor level: 172.70
Major level: 171.89

The GLD closed at 175.08. The GLD closed 8.11 lower on the day.

Right at the 175 level. Watch the minor 178.91 and 174.25 levels.

The GLD is back under the midband on the 60 minute chart. This level is 178.23 and should be resistance.

XLE:

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: 34.37
Minor level: 33.59
Minor level: 32.03 **
Major level: 31.25
Minor level: 30.47
Minor level: 28.90
Major level: 28.13

The XLE closed at 33.06. The XLE closed 4.13 higher on the day.

Watch the major 28.13 level for support. A close today above 32.03 and the XLE should test 34.37.

The XLE is overbought now. It is above the upper band on the 60 minute chart. That level is 32.74.

AAPL:

Minor level: 140.63
Major level: 137.50
Minor level: 134.38
Minor level: 128.13
Major level: 125.00
Minor level: 121.88
Minor level: 115.63 **
Major level: 112.50
Minor level: 109.13
Minor level: 103.13
Major level: 100.00

Apple closed at 116.32. Apple closed $2.37 lower.

Apple held the 115.63 level. Watch this level today. If it can hold, it should test 125.

And look for support at 115.63.

Apple cleared the midband on the 60 minute chart. That level is 115 and should now be support.

WATCH LIST:

Bullish Stocks: GOOGL, TTD, IDXX, ALGN, LRCX, UNH, FB, QDEL, KLAC, CMI, RMD, LH, IT, HON, QCOM, FFIV, BIDU, XLNX, ZEN, MIDD

Bearish Stocks: CRI, INGR, PRU, LEG, VLO, THS, CF, FANG, HFC