October 28, 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 Monday's bearish long range candle, the S & P closed slightly lower. The day ended with the S & P 500 closing 10.29 points lower.

The S & P 500 closed at 3,390.68.

The range for the day contracted, as you would expect after a long range day. The daily range was only 20.80 points. This was only 40% of the daily average true range. The daily average true range now reads 52.04 points.

And the daily price bar closed at only 9% of the range of the daily bar.

This does suggest that the low should be violated before the high. And with the contraction yesterday and the fact that the daily price bar was an inside bar, we do expect a range expansion.

And the resistance level from yesterday's daily price bar is in the 3,400 area. This also happens to be the monthly level I have been writing about.

And this was also the first close under the minor 3,398.35 level. This is a critical level and a close under this level today would suggest a drop to the 3,281.20 level.

A drop to the 3,281 level would not affect the uptrend. In fact, this pullback could go to 3,238 without impacting the trend.

And as I have been writing about, both the 60 minute charts for the S & P and the QQQ, are in uptrends.

This does tell us that the markets should rally once they find support.

Pre open, the S & P is trading about 56 points lower. This projects to an open around 3,334.

This would be about 30 points below the low of the bearish long range candle from Monday.

Watch the 3,350 area on a rally. On the downside, watch the major 3,281 level.

MSFT reported and is down $5.74.

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:

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
Minor level: 22.66
Major level: 21.88

The VIX closed at 33.35. The VIX closed .89 points higher.

Watch the 34.38 level. This should be the objective and the VIX is within a point of it.

The next major level would be 37.50.

Support should be at 31.25.

Short term, the VIX is overbought. It is now above the upper band on the 60 minute chart.

This level is 32.59. This also tells us to expect another run to test the upper band once it does close back inside it.

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 3,390.68. The S & P closed 10.29 points lower.

The market is expected to gap lower at the open. The projected open should be around 3,334.

This is about 14 points above the minor 3,320 level. Watch to see if this offers any support. If it can't, I expect a drop to the major 3,281 level.

Resistance should be at 3,395, which is the midband on the 60 minute chart.

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 282.66. The QQQ closed 2.19 higher.

The QQQ would need two closes under 279.69 to drop to 275. With a break under 270.69, the QQQ should head lower.

279 is the midband on the 60 minute chart. A break under it and that level should be resistance and indicate lower prices to follow.

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 158.18. The IWM closed 1.37 lower on the day.

A close today under 160.94 and the IWM should drop to 156.25.

The IWM has already crossed into an uptrend on the 60 minute chart. The 155 area 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 160.55. It closed 1.07 higher. The TLT closed above the minor 160.16 level.

This now suggests that if the TLT closes above 160.16 today, it should head up to 162.50.

The midband on the 60 minute chart, which is 162.13 should be the objective and 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 179.02. The GLD closed .47 higher on the day.

Watch the minor 178.91 level today. If the GLd can hold this level, it should bounce higher.

If not expect lower prices.

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: 28.13 <

The XLE closed at 28.92. The XLE closed .38 lower.

The objective should be to the 28.13 level. And the XLE is within a point of it.

The next major level under 28.13 should be 25.

The 27.00 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 116.60. Apple closed $1.55 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 115.11. Watch what Apple does here. It will tell us the direction of the next move. A break under it and expect Apple to head lower.

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