October 15, 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.

The sell-off that began on Tuesday, followed through yesterday. But, we were expecting that based on the 33% close percentage on Tuesday.

And the market dropped to fill the gap. Yesterday's low was 3,480.55 and the open gap was at 3,482.34.

I mentioned two gap levels. The first was the 50% level and the second was the full gap.

As it turned out, the S & P did drop to fill the whole gap.

The daily price bar closed the day out at only 17% of the range of the daily price bar. This of course suggests that yesterday's low of 3,480.55 should be violated before the high of 3,527.94.

The intra day range did exceed the range on Tuesday, but it was still less than the daily average true range.

The range for the day was 47.39 and the daily average true range is 55.27 points.

This is a contraction of 86% of the average. This was the sixth consecutive range contraction. As you know, this will lead to an expansion.

And pre open, the is trading about 44 points lower. This projects to an open around 3,445. This would be about 36 points under yesterday's low. So, the close percentage projections should be satisfied right at the open.

On a bounce after the open, watch the 3,462 area. This is the 50% level of the gap.

On the downside, the weekly support level is around 3,422 or about 23 points below the projected open.

After that level, the monthly support level is 3,400, which also happens to be the midband on the 60 minute chart.

MS reported and is trading about $.63 lower.

TEAM reports this afternoon, after the close.

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 at 26.40. The VIX closed .33 point higher. With a second close above 25.78, the objective should be to 28.13.

Even with the push higher, the VIX did not close above the midband on the daily chart. The midband is now 26.66.

If the VIX does take out the midband, it should be support.

Technical resistance is still around 27.

S & P 500:

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 3,488.67. With a projected open around 3,444, look for support at the major 3,437 level.

And the minor 3,476.45 level should now be resistance.

Technical support is around 3,422. Also, the 60 minute chart is close to crossing into a bull trend.

QQQ:

Major level: 300.00
Minor level: 298.44
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

The QQQ closed at 292.06. The QQQ closed 2.46 lower. The QQQ had it first close under 292.19. A close today under this level and it should drop to 287.50.

The 293.75 should now be resistance.

The QQQ is close to crossing into an uptrend on the 60 minute chart. Technical support is around 290.

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 161.09. The IWM closed 1.61 lower on the day.

The minor 160.94 level should be support.

The upper band on the 60 minute chart is 166, and the IWM is selling off from it. Support should be at 154.

The IWM has already crossed into an uptrend on the 60 minute chart.

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 < HIT
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 162.12. It closed .37 higher. The TLT should test 162.50. And it hit the target, with a high of 162.75.

161.72 should be support.

The TLT did retest the lower band on its 60 minute chart and closed below it. The lower band is 159. Target should be to the midband, which is 163. And the TLT is just under it. Watch to see if the TLT can clear it today.

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 178.27. The GLD closed .55 higher on the day.

Biased for a drop to 175, with resistance still at 178.91.

After trading right on the midband on the 60 minute chart, the GLD broke and closed under it. This level should still be resistance. The midband is 180.

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 30.52. The XLE closed .13 higher. The XLE needs to fail at 30.47 to head lower.

If the XLE cannot hold 30.47, it should head back down. It needs to clear 31.25 to head higher.

The 30.00 area should be technical support.

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 121.19. Apple closed $.09 higher.

Watch the minor 121.88 level. Biased for a drop to 112.50.

Apple took out the midband on the 60 minute chart. That level is 117 and should now be support. Watch to see if this level holds.

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