October 9, 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.

Before I begin, I do need to mention that there is one position that expires this afternoon and that is the short $6 call on CLVS.

Hold the call and if I suggest an adjustment, you will receive a separate email. CLVS did settle under the $6 strike yesterday.

The S & P 500 continued to head higher yesterday. The day closed out 27.39 points higher. And the day closed out at 3,446.83.

This put the market above the 3,437.40 objective. And the market closed 9.43 points above the target we have been looking for.

The day closed at 98% of the range of the daily price bar. This does suggest that yesterday's high of 3,447.28 should be violated before the low of 3,428.15.

And the support area from yesterday's daily bar should be in the 3,440 area. Under this level, there is support at around 3,438.

The only negative was the fact that the range for the day was only 19.13 points.

This was a contraction. The daily range was only 33% of the daily average true range which now reads 58.06.

If we take a look at how the weekly price bar is forming we see that the range through yesterday was 93 points. The weekly average true range is 130 points.

If I project a move to the weekly average, the high for the week would project to 3,485.

This would be 37 points above yesterday's close. Is that possible? With a daily average true range of 58 points, this is certainly within reach.

Also, the midpoint of the weekly bar through yesterday is 3,400. Here is that price again.

You may recall that 3,400 is the midpoint of the last two monthly price bars. Certainly a key price level for this market.

This level should be support on a pullback.

To close out, I want to mention that the S & P is trading about 16 points higher pre open.

This projects to an open around 3,462 or about 15 points above yesterday's high.

Watch the 3,455 area on a pullback. And then yesterday's high of 3,447, on a deeper sell-off.

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 26.36. For the day, the VIX closed 1.70 points lower. This now suggests that if the VIX closes under 27.35 today, it should drop to 25.

The VIX has now closed back under the major 28.13 level.

The VIX finally closed under the midband on the daily chart. That level is now 26.52 and the VIX closed just under it.

Look for a further push under the midband.

S & P 500:

Major level: 3,593.60
Minor level: 3,554.55
Minor level: 3,476.45
Major level: 3,437.40 < HIT
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 3,446.83. This was the first close back above the objective of 3,437.40.

This level should now be support. And two closes above 3,476.45 and the S & P should test 3,593.60.

The S & P did clear the midband on the 60 minute chart, which is 3,391. This level should now become support.

QQQ:

Minor level: 289.06
Major level: 287.50
Minor level: 285.94
Minor level: 282.81 **
Major level: 281.25 < HIT
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 281.41. The QQQ closed 1.49 higher. The QQQ closed just above the major 281.25 level.

279.69 should now be support. And the next minor level is 282.81.

The QQQ cleared the midband on the 60 minute chart. That price level is now 279 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

The IWM closed at 161.86. The IWM closed 1.82 higher on the day.

The IWM came within 22 cents of the 162.50 objective. The IWM should take out the objective today and it would then be support.

The upper band on the 60 minute chart is 163. Watch how the IWM reacts at this level.

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 160.12. It closed .86 higher. The TLT needs two closes above 160.16 to move up to 162.50.

159.38 should be support.

The TLT did retest the lower band on its 60 minute chart and closed below it. This tells us there should be further selling pressure after a bounce. The lower band is 159 and should be support.

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 177.85. The GLD closed .63 higher on the day.

175 should be support. So, if this level gets violated, I would expect the GLD to head lower.

Look for a retest of the lower band on the 60 mintue chart. That level is 173. Technical resistance is around 180.

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 HIT
Minor level: 30.47
Minor level: 28.90 **
Major level: 28.12

The XLE closed at 31.29. The XLE closed 1.13 higher.

The XLE closed just above the major 31.25 level. A move to the 34.37 level should follow if the XLE can close above 32.03.

28.90 should be support.

Objective should be to the 33 area.

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 114.97. Apple closes $.11 lower.

Apple needs to recoup 115.65 to move higher.

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