October 27, 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.

Yesterday, the S & P 500 had a long-range bearish day. The S & P 500 closed 76.56 points.

The market closed at 3,400.97.

The range for the day was 141% of the daily average true range, which is now 54.45 points.

This expansion followed four days that contracted. And as I pointed out yesterday, we had two consecutive weekly contractions.

But there were two relatively bullish factors yesterday.

The first was the fact that the S & P closed at 47% of the range of the daily price bar. This was almost back to the midpoint. Not a bearish if the daily bar closed towards the low of the day.

But, this still suggests that the low should be violated before the high.

And you want to watch the midpoint today, which is 3,403.

Above the midpoint, the next level to watch would be around 3,421.

The other factor bullish factor was that the S & P managed to close above the 3,400 level. Granted, it was only .97 points, but the market managed to rally 36 points off the low.

The 3,400 level is the level I have been writing about for a while. And it still should be a key level.

Last week's low of 3,415.34 should also be the next level to watch above 3,400.

Pre open, the S & P is trading about 13 points higher.

So, watch the 3,400 and 3,403 area on the downside. And on the upside, watch the 3,415 level.

If the S & P can clear 3,415, I would expect a move up to 3,450.

TWLO reported and is trading about $2 higher. CAT is trading 3.66 lower after reporting. And MMM is trading 1.77 lower.

This afternoon, we get earnings from AMD and MSFT.

Wednesday afternoon, we get earnings from BYND, ETSY, and PEN. And Thursday morning we hear from OSTK, SHOP, WEX, and SPOT.

And after the close on Thursday, we get earnings from GOOGL, AMZN, FB, SHAK, and ZEN.

Here are the Key Levels for the Markets:

$VIX:

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
Minor level: 22.66
Major level: 21.88
Minor level: 21.10

The VIX closed at 32.46. The VIX closed 4.91 points higher. The VIX spiked 17.82%.

This put the VIX just above the minor 32.03 level. A close today above this level and the VIX should test 34.38.

Support should be at 31.25.

Short term, the VIX is overbought. It is at the upper band on the 60 minute chart. That price level is 32.69. And yesterday's high got above it, but it did not close above it.

On the downside, the daily midband, which is 27.12, should be support.

The 60 minute chart is bearish, so I do expect it to sell off.

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 3,400.97. The S & P closed 64.42 points lower.

The S & P managed to close above the 3,398.35 level. It would need two closes under this level to drop to 3,281.

Watch for support at this level. And if it holds, a move up to 3,437 is possible.

3,395 is also the midband on the 60 minute chart. The S & P managed to close just above it. A break under it and I would expect the market to drop further.

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 280.47. The QQQ closed 4.27 lower. The QQQ dropped to the 276.56 level, but managed to close above 279.69.

The QQQ would need two closes under 279.69 to drop to 275.

But, watch for support at the 279.69 level. If this level holds, a move up to 281 would be expected.

Like the S & P, the QQQ crossed into an uptrend on its 60 minute chart. And the midband is 278.90 and should be support. The QQQ is sitting right on the midband.

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 159.55. The IWM closed 3.52 lower on the day.

Watch the 160.94 level today. The IWM needs to clear this level to head higher. If not, a close under it and the IWM should drop to 156.25.

The IWM has already crossed into an uptrend on the 60 minute chart. The 158area is still 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

The TLT closed at 159.48. It closed 1.47 higher. The TLT already hit the 159.38 level I mentioned yesterday.

To move higher, the TLT needs two closes above 160.16.

The TLT did bounce off the lower band on the 60 minute chart, as we expected.
Target now should be to the midband, which is 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 178.55. The GLD closed .09 lower on the day.

Resistance is at 178.91. To move higher, the GLD will need to close above the 178.91 level.

The GLD is below the midband on the 60 minute chart. This level should now be resistance, which is 179.50. If the GLD clears this level, it would then 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
Minor level: 30.47
Minor level: 28.90 **
Major level: 28.12 <

The XLE closed at 29.30. The XLE closed 1.09 lower. Watch the 30.47 level today.

A close today under this level and the XLE should drop to 28.

It needs to clear 30.47 to head higher.

The 29.00 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 115.05. Apple closed $.01 higher.

Apple dropped to within 38 cents of the major 112.50 level.

Apple is right at the midband on the 60 minute chart. That level is 115.17. Watch what Apple does here. It will tell us the direction of the next move.

WATCH LIST:

Bullish Stocks: GOOGL, ALGN, HUM, PAYC, SPY, UNH, BABA, CMI, ROKU, SPLK, TEAM, LH, ITW, FDN, RMD, PYPL, QRVO, QRVO, DGX, MCHP,

Bearish Stocks: LMT, NOC, LHX, CME, IBM, LDOS, CBOE, STWD, SBRA