October 29, 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 the contraction on Tuesday, the S & P 500 had another long range bearish candle.

Yesterday's range actually exceeded the range from Monday. The range on Monday was 76.56 points and yesterday's intraday range was 73.59 points. But, if you factor in the bearish gap of 48 points, the low to low measurement was actually 119.82 points.

The 119.82 point range was just over 200% of the daily average true range, which is now 57.03 points.

And with the daily price bar closing at 3% of the range of the daily price bar, the odds still favor more selling pressure.

And the resistance from yesterday's daily price bar is in the 3,306 area.

The question is how far can this pullback go?

As I mentioned yesterday, I was looking for a move to the major 3,281.20 level. And the market stopped right at it.

In fact, the S & P had four drops to just above the 3,281.20 level before finally dropping under it.

If the S & P cannot reclaim this level, I would expect a drop down to the 3,242.15 level. And if the market closes under this level, a drop to 3,125 would be the next move.

There are still various support levels under the market and the daily chart is still in an uptrend, so I do expect support to come in. The question is where?

I will outline the support areas.

The first area would be around 3,238. This level is only 33 points away from yesterday's close, so it could be tested today.

The next level under this area, would be the lower band on the 60 minute chart, which is 3,200.

The lower band is also close to the 200 ema on the daily chart, which is 3,195. So, I would expect some weight to this level.

If this level fails, then a drop to the midband on the daily chart is the next objective. That price level is 3,135. With the S & P in an uptrend on the daily chart and price above the midband, this level should be support.

These are the area I see as potential support and I will continue to monitor these levels into the future.

Pre open, the S & P is trading about 4 points higher.

ETSY reported and is trading about 2 lower. PINS reported and is trading about $15 higher.

PEN reported and is trading about $17 higher.

OSTK reported and is trading about $10 higher. SHOP is up $29 after reporting.

And SPOT is down about $16 after reporting.

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: 41.40 **
Major level: 40.62 <
Major level: 37.50
Minor level: 36.72
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

The VIX closed at 40.28. The VIX closed 6.93 points higher.

The next minor level is 41.40. The VIX needs to close above this level to continue higher.

Short term the VIX is overbought. Is it trading about 20% above the upper band on the 60 minute chart. That level is now 34.52.

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 3,271.03. The S & P closed 119.65 points lower.

Watch the major 3,281.20 level on the upside and 3,242.15 on the downside.

Also, monitor the major support levels I mentioned above.

Resistance should be at 3,392, 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 271.64. The QQQ closed 11.02 lower.

The broke under the 275 level. 275 should now be resistance.

279 is the midband on the 60 minute chart. The lower band is 258 and should be a support level.

IWM:

Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
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 153.51. The IWM closed 4.87 lower on the day.

A close today under 154.70 and the IWM should drop to 150.00.

The IWM broke under the midband on the 60 minute chart which is 155. This should be resistance.

147 should be 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 160.70. It closed .15 higher. The TLT closed above the minor 160.16 level.

Target should be up to 162.50.

The midband on the 60 minute chart, which is 162 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 176.13. The GLD closed 2.89 lower on the day.

178.91 should be resistance with a target down to 175.

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 27.71. The XLE closed 1.21 lower.

The XLE took out the objective of 28.13.

The next major level under 28.13 should be 25. And two closes under 27.35 would confirm a drop to 25.

The 27.00 area should be technical support and is the lower band on the 60 minute chart.

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 111.20. Apple closed $5.40 lower.

Apple took out the 122.50 level. Two closes under 109.13 and Apple should rop to 100.

Apple is right at the midband on the 60 minute chart. That level is 115. This should be resistance now.

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