October 12, 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.

I did suggest closing out the short call that expired Friday and roll out to next Friday. This now brings the premium collected to 10.4% of the purchase price. And if the calls are assigned this Friday, the total return will be 14.4%.

When I issued the alert on Friday, I stated in error that the markets are closed today for Columbus Day. The NYSE and the NASD are open. Only the bond markets are closed for the holiday.

The S & P 500 closed the week out higher. The day closed out 30.31 points higher. And the day closed out at 3,477.14.

The day closed out ay 79% of the range of the daily bar. This suggests the high should be violated before the low. And the support area from Friday's daily price bar is in the 3,468 to 3,470 area.

The range for the day was only 24.27 points. This was only 43% of the daily average true range, which now reads 56.47 points.

In Friday's update, I mentioned two levels for the possible high and low for the day.

As for the low, I mentioned this ... "Watch the 3,455 area on a pullback. And then yesterday's high of 3,447, on a deeper sell-off."

As it turned out, the low for the day was 3,458.07 or only 3 points above the first level.

And I wrote this about the high ... "If I project a move to the weekly average, the high for the week would project to 3,485."

As it turned out, the high for the week was 3,482.34, or about 3 points below the projection.

Funny how both levels fell 3 points off.

But again, having these levels in advance can help you to initiate day trades. And to look for entries around these key levels.

For the week, the S & P closed 128.72 points higher. The weekly price bar closed at 96.7% of the range for the week.

This tells us that there is almost a 100% chance that last week's high should be violated before the low.

And pre open, the S & P is trading about 29 points higher. This would project to an open around 3,506 or about 24 points above last week's high of 3,482.34.

So, the high should be violated right at the open.

The support area should be around 3,494. If this level does not hold, look for last week's high to hold.

The weekly price bar support area is around 3,403. Above this level, there is support around 3,422.

This week begins earnings season with a lot of the big banks reporting.

Tomorrow, we get earnings from JPM. And GS reports Wednesday before the open, along with BAC. MS reports Thursday before the open.

Here are the Key Levels for the Markets:

$VIX:

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 < HIT
Minor level: 24.22
Minor level: 22.66
Major level: 21.88
Minor level: 21.10

The VIX closed exactly on the 25 level. For the day, the VIX closed 1.36 points lower. The VIX hit the 25 target we were looking for.

It needs two closes under 24.22 to drop to 21.88.

The VIX has closed firmly under the midband on its daily chart. That level is now 26.54 and should be resistance.

S & P 500:

Major level: 3,593.60
Minor level: 3,554.55
Minor level: 3,476.45 **
Major level: 3,437.40 < HIT
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 3,477.14. The S & P managed to have its first close above the minor 3,476.45 level. With a close above this level today, the target should be to 3,593.60.

Also, the minor 3,477.14 level should be support.

Technical support should be around 343.

QQQ:

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
Minor level: 267.19
Minor level: 264.06
Major level: 262.50

The QQQ closed at 285.71. The QQQ closed 4.30 higher. With a close above 282.81, the QQQ should test 287.50.

282.81 should now be support. And the 284 area should be support.

The QQQ cleared the midband on the 60 minute chart. That price level is now 279 and should be support. The QQQ is close to crossing into an uptrend on the 60 minute chart.

IWM:

Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50 < HIT
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
Minor level: 145.31
Major level: 143.75

The IWM closed at 162.70. The IWM closed .84 higher on the day. And closed above the objective we were looking for.

The minor 160.94 level should be support. The next minor level is 164.06.

The upper band on the 60 minute chart is 163.89. Watch how the IWM reacts at this level.

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

The TLT closed at 160.09. It closed .03 higher. The TLT needs two closes above 160.16 to move up to 162.50.

159.38 should be support.

The TLT did retest the lower band on its 60 minute chart and closed below it. The lower band is 159. Oversold at the moment.

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 181.08. The GLD closed 3.23 higher on the day.

The GLD needs to clear 181.25 to head higher and 180.47 should be support.

It took out the midband on its 60 minute chart. This level is 180.66 and should now be support.

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 HIT
Minor level: 30.47
Minor level: 28.90 **
Major level: 28.12

The XLE closed at 30.79. The XLE closed .50 lower.

If the XLE cannot hold 30.47, it should head back down.

The 30.00 area should be technical support.

Objective should be to the 33 area.

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 116.97. Apple closed $2.00 higher.

With a close today above 115.64, Apple should test 125.

Apple is right at the midband on the 60 minute chart. That level is 117 and should be resistance. Watch the midband. If it clears it, expect it to move higher.

WATCH LIST:

Bullish Stocks: SHOP, TTD, NVDA, NFLX, ZM, HUM, IDXX, AVGO, COST, LRCX, TWLO, FDX, DE, QDEL, WDAY, DG, TEAM, LH, BYND, UPS, LLY

Bearish Stocks: CBOE, MRL, WYNN, LVS, ICPT, DISH, MD, MDP, KIM