October 5, 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.

You should have been assigned on the HOG position on Friday. The return worked out to 5.1% for an eight-day holding period. If you traded the suggested 300 share lot, the gain worked out to $360.

CLVS settled under the $6 strike price and two cents below what the cost was. This means that the $6 call expired worthless and it frees the position up to sell more call options. The return for one week for selling the calls worked out to 4.5%.

The S & P 500 closed out Friday 32.38 points lower. The S & P closed out the week at 3,348.42.

The range for the day was only 45.41 points. This was 78% of the daily average true range.

The average range now reads 58.51 points.

This is now the fifth consecutive range contraction. Which, as you know, does lead to expansions. As it turned out, everyday last week saw a range contraction.

The daily price bar closed at 54% of the range of the price bar. This is relatively neutral.

And the support area from Friday's daily price bar is in the 3,343 to 3,346.

Pre open, the S & P is trading about 25 points higher.

This projects to an open around 3,373 or about 4 points above Friday's high.

Watch for support at Friday's high. If this level is taken out, then the close of 3,348 should be support.

On the upside, the monthly resistance level of 3,399 is still valid. This level was tested once already on Thursday and it failed.

For the week, the S & P 500 closed 49.96 points higher. With every daily price bar contracting last week, the weekly price naturally contracted as well.

The range for the week was 73.49 points. This was 55.4% of the weekly average true range, which is 132.75 points.

And the weekly price bar formed another doji bar. The support area from last week's price bar should be in the 3,360 area.

And the close of 3,348.42 should also be a support area.

Earnings do continue this week, but the companies reporting are slowing down as we wind down to the end of earnings season.

PAYX reports tomorrow before the open. DPZ reports Thursday, before the open.

Be aware of the levels I have mentioned above.

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
Minor level: 24.22
Minor level: 22.66
Major level: 21.88
Minor level: 21.10

The VIX closed at 27.63. For the day, the VIX closed .93 points higher.

The high for the day was 29.90 before dropping to close lower. Resistance should be at the major 28.13 level.

Also, the VIX continues to trade around the midband on the daily chart. The midband is 26.37. And yesterday's low dropped below the midband, but the VIX managed to close above it.

The midband is still support, until it is violated.

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 3,348.42. Support should still be around the 3,320.25 level.

Friday's low stopped about 3 points above the minor 3,320 level. The low for the day was 3,323.69.

The 60 minute chart for the S & P is still bearish and is trading under the midband. That level should be the objective, which is 3,388.

Technical support should be around 3,338.

QQQ:

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
Minor level: 273.44
Minor level: 270.31
Major level: 268.75
Minor level: 267.19
Minor level: 264.06
Major level: 262.50
Minor level: 260.94
Minor level: 257.81
Major level: 256.25

The QQQ closed at 274.31. The QQQ closed 7.94 lower. Watch the major 275 level. If the QQQ can clear this level, it should be support.

Watch for support at 268.75.

The QQQ broke under the midband on the 60 minute chart. That price level is now 278 and should be resistance. If the QQQ opens under it, look for it to be resistance.

IWM:

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
Minor level: 142.19
Minor level: 139.06
Major level: 137.50
Minor level: 135.94

The IWM closed at 152.85. The IWM closed .67 higher on the day.

With a close today above 151.56, the IWM should test 156.25.

The midband is now 146 and should now be support. And support should be at the 150 level as well.

And the midband on the 60 minute chart is 152.64, and IWM is trading right at it. It should be support.

TLT:

Major level: 171.88
Minor level: 171.10
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

The TLT closed at 162.75. It closed .61 lower.

The TLT needs to clear 163.28 level to move higher. If the TLT breaks under the 162.50 level, it should head lower.

The 164 area is now technical resistance. This is the key area at the moment. The TLT has crossed into an uptrend, so short term momentum is now bullish.

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 < HIT!
Minor level: 174.25
Minor level: 172.70
Major level: 171.89

The GLD closed at 178.54. The GLD closed .16 lower on the day.

Two closes above 178.92 and the GLD should test 181.25.

The GLD is pushing up from the lower band on the 60 minute chart. Look for a move up to the midband, which is 181.50.

Getting the oversold bounce we expected.

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 29.31. The XLE closed .28 higher.

Target was down to the 28.12 level, and the XLE hit a low of 28.20 on Friday. Close enough to say it was hit.

A close today above 28.90 and the XLE should head up to 31.25.

Short term charts remain bearish. And the lower band on the 60 minute chart is 27.18. And the midband is 33.60, which should be resistance on a bounce.

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 113.02. Apple managed to close $3.77 lower.

112.50 should be a support level.

Apple broke under the midband on the 60 minute chart. That level is 117 and should be resistance. Apple has crossed into a downtrend on the 60 minute chart. Short term momentum is bearish. Watch the midband.

The lower band is 100 and that should be support now.

WATCH LIST:

Bullish Stocks: NVDA, ZM, DPZ, TSLA, RH, COST, BABA, FDX, CRM, AMGN, WDAY, DG, ROKU, LH, TEAM, SQ, LVGO, NKE, Z, PTON, DDOG, ZEN, CDAY

Bearish Stocks: LMT, NOC, LHC, DIX, GWRE, EXPE, CBOE, MRK, CM, CVX, PRGO, MTZ, LVS, EOG, MPC, UFS