October 19, 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 short $18 call on BOX expired on Friday. And CLVS settled at $5.99, so I will assume your $6 call was not exercised as well.

I will look to sell more calls this week on both positions.

Both puts on the QRVO position expired on Friday as well. This resulted in a 50% loss based on the short put sold and the long call sold.

Friday, the S & P 500 closed marginally higher. The day closed out .47 points higher.

For the day, the S & P closed at 3,483.81. The range for the day contracted as well. The intra day range was only 35.31 points. This was 66% of the daily average true range.

Friday was now the 9th consecutive range contraction. This tells us to expect an expansion at some point.

The daily price bar closed at only 10% of the range of the day. This tells us to expect the low to be violated before the high.

Having said that, the S & P is trading about 25 points higher before the open.

This would project to an open around 3,509 or about 7 points below Friday's high of 3,515.76.

Watch to see if the market can take out Friday's high on a continuation move. If it can't, then I would expect a pullback. The logical support area in this event would be around 3,498.

Below this level, the next support level is around 3,489.

For the week, the S & P ended up closing 6.67 points higher. And it closed at 39.4% of the range of the weekly price bar.

The weekly range also contracted. The weekly range was only 109 points, which was a contraction of 83% of the weekly average true range.

The weekly price bar formed a doji after two higher closes.

The weekly high was 3,549.85 and the low was 3,440.89. The close of 3,483.81 should also be a key level to watch.

With an expected open above the close, look for support around the close.

The weekly support level is in the 3,491 to 3,495 area.

This week, earnings start to pick up.

Watch for support around 3,493 and then at the prior high at 3,489. This afternoon, we get earnings from IBM.

And tomorrow after the close, we hear from NFLX. Wednesday after the close, we get earnings from CMG and TSLA.

And the week ends with AMZN reporting Thursday after the close, along with INTC.

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 27.41. The VIX closed .44 point higher. The VIX and the
S & P diverged on Friday, with both closing higher.

Watch the minor 27.35 level today. A break under this level and it should be resistance.

The VIX did clear the midband, but managed to move to it. The midband is now 27.24. Watch for a break under the midband.

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 3,483.81. The minor 3,476.45 level should still be support.

Technical support is right at 3,488. With the 60 minute chart crossing into a bull trend, I would expect a rally.

The objective is still up to the 3,593.60 level.

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 288.51. The QQQ closed 1.59 lower. Watch the minor 289.06 level today. I expect an open above this level, which would suggest it should be support o[n a pullback.

The 293.75 should now be resistance.

Like the S & P, the QQQ crossed into an uptrend on its 60 minute chart.

The support area from Friday's daily bar is in the 290 area.

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 162.35. The IWM is trading right around the 162.50 level.

It needs to clear the major 162.50 level to head higher.

The minor 160.94 level should be support. And two closes above 164.06 and the IWM should head up to 168.75.

The upper band on the 60 minute chart is 167, and the IWM should retest it.

The IWM has already crossed into an uptrend on the 60 minute chart. 162 is 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 < 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 161.39. It closed .45 lower. The TLT hit the 162.50 objective.

If the TLT closes under 161.72 today, I would expect a drop to 159.

The TLT hit the midband on the 60 minute and sold off. Look for it to be resistance. Technical resistance is at 162.

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 178.30. The GLD closed .62 lower 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. And technical resistance is at 179.

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 30.19. The XLE closed .70 lower. The XLE needs to fail at 30.47 to head lower. And with a close under 30.47 today, it should head lower.

It needs to recoup 30.47 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 119.02. Apple closed $1.69 lower.

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: MELI, ZM, NOW, ROP, RH, POOL, CTAS, ALGN, COUP, FDX, DE, DOCU, WDAY, ADSK, MCD, VRSK, PYPL, BAND, TSCO, ETSY

Bearish Stocks: NOC, LHX, CBOE, MRK, RCL, CPA, VLO, CF, LYFT