October 6, 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.

I suggested selling another round of calls against the CLVS position. You should have sold the $6 call that expires this Friday if you followed the alert.

I also put on another debit spread on MSFT. This alert traded the October 23rd expiration.

The S & P 500 closed out with a strong day yesterday. For the day, the S & P closed 60.18 points higher.

The S & P closed the day at 3,408.60.

The range for the day was only 42.30 points. This was 72% of the daily average true range.

The average range now reads 58.60 points.

This is now the sixth consecutive range contraction. Which, as you know, does lead to expansions.

I am still biased for large moves to follow.

The daily price bar closed at 98% of the range of the price bar. This puts the odds of violating yesterday's high before the low at almost 100%.

And the support area from yesterday's daily price bar is in the 3,388 area.

Pre open, the S & P is trading about 6 points higher.

This projects to an open around 3,414 or about 5 points above yesterday's high.

Watch for support at yesterday's high of 3,409.57. And at the close of 3,408.60. If these levels do not hold, look for the daily support around 3,388.

By taking out the monthly resistance level of 3,399, this level should now become support. So, watch this level as well on a pullback.

The only bearish scenario at the moment is that the S & P and the VIX have diverged once again. They both closed higher yesterday, which creates the divergence.

This typically indicates that something could be changing in the market. But, it is not a perfect timing indicator.

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 27.95. For the day, the VIX closed .33 points higher.

The VIX did close under the major 28.13 level. This level should stll be resistance.

Also, the VIX continues to trade around the midband on the daily chart. The midband is 26.40. 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. And 29.50 is technical resistance.

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 3,408.60. With a close above the minor 3,398.35 level, it should now be support.

And the S & P is now within 30 points of the 3,437.40 objective.

The S & P did clear the midband on the 60 minute chart, which is 3,389. This level should now be support.

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 280.16. The QQQ closed 7.94 lower. Watch for the QQQ to take out the major 282.15 level. This would be support in that event.

Watch for support at 279.69.

The QQQ took out the midband on the 60 minute chart. That price level is now 278 and should be support.

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 157.07. The IWM closed 4.22 higher on the day.

The IWM took out the 156.25 level. With two closes above 157.81, the IWM should head up to 162.50.

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 152.62, and IWM took it out. It should now 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 159.57. It closed 3.18 lower. The TLT finally broke. And with a close under 161.72 today, it should head down to 159.38.

The TLT is now oversold. It closed under the lower band on the 60 minute chart. That level is 160.50.

A retest should be expected after it closes back inside the lower band.

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 179.41. The GLD closed .87 higher on the day.

A close today 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 181.20. And this level should be resistance.

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 30.19. The XLE closed .88 higher.

After reversing at the 27.12 level, the XLE has now bounced and closed above the 28.90 level. A close above this level today and the XLE should test 31.25.

Short term charts remain bearish. And the lower band on the 60 minute chart is 27.18. And the midband is 33.40, 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 116.50. Apple managed to close $3.48 higher.

112.50 should be a support level. And the minor 115.63 should as well.

With a close today above 115.63, Apple should head up to 125.

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.

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