September 18, 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.

There is one position that expires today and that is the short $6 call on CLVS. CLVS is well in the money, so I am not going to suggest an adjustment. Unless, of course, it does drop today to around the $6 strike. So, hold the position through the close.

Assuming that CLVS does settle above $6 per share, the calls will be assigned and you will sell your shares at $6.

Yesterday, the S & P 500 followed through with the selling pressure from Wednesday and closed 28.48 points lower.

The day closed out at 3,357.01. The intra day range was less than the daily average true range. The range for yesterday was 46.25 points and the average range is 56.25 points.

But if you factor in the gap between Wednesday's low and yesterday's high, which was 9.28 points, the range would be 55.63 points, which is about the average.

This is important because I mentioned this yesterday ... "If I project the daily average true range to a potential low, it works out to 3,328. This subtracts the daily average true range from yesterday's low. This would be about 12 points lower than the projected open."

And as it turned out, yesterday's low was 3,328.82.

This simple projection puts you in right at the daily low. And the market did move about 28 points up to the close, so a day trade would have been profitable.

Support from yesterday's daily bar is in the 3,352 area. and with the daily price bar closing at 61% of the range, the odds favor the high to be tested.

In taking a look at how the weekly price bar is forming, we see that through yesterday, it has a range of 100 points. This is about 34 points less than the weekly average true range.

And the midpoint through yesterday is 3,379. And the open for the week was 3,363.56.

Yesterday's close was 3,357.01, so watch these levels on a rally.

The most important factor for the weekly bar is that at it is an inside bar.

So, watch last week's high of 3,425.55 and low of 3,310.47.

If the week closes out with an inside bar, I would expect volatility next week.

Pre open, the S & P is trading about 12 points higher.

This projects to an open around 3,369.

Watch yesterdays high of 3,375.17. If the market can take out yesterday's high, a run to fill the gap at 3,384.45 should be the next target.

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 26.46. For the day, the VIX closed .42 points higher.

The key again for the VIX is the midband on the daily chart. That level is 25.90 and the VIX managed to close just above it again.

A break under this level and the VIX should head lower.

If the VIX holds at the midband, it should bounce which would suggest the market would reverse lower.

A break under the midband and the market should continue higher.

The other key is the minor 25.78 level. The VIX should test 28.13.

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 3,357.01. The objective should be to the 3,281.20 level.

Resistance should now be at 3,398.

3,386 is the midband on the 60 minute chart and the S & P should open below it. This level should now become resistance.

Short term trends remain bullish but are close to crossing into a downtrend.

QQQ:

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 <
Minor level: 273.44 **
Minor level: 270.31
Major level: 268.75
Minor level: 267.19

The QQQ closed at 270.32. The QQQ closed 4.29 lower.

Watch the 273.44 level. A close today under this level and the QQQ should test 268.75.

The QQQ broke under the midband on the 60 minute chart. That price level is 277 and should now be resistance.

IWM:

Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25 < HIT
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 153.69, closing 1.13 lower. Watch the 154.70 level. A close today under it and the IWM should drop to 150.

The 151 area should provide technical support.

147 is the midband on the daily chart and should be support. And the 152 area should be technical support.

154.70 is the key level on the downside.

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 164.08. The 164.85 level is the key short term level.

To move higher, the TLT needs to recoup the 164.85 level. If not, a drop to 162.50 would be expected.

The TLT got about 10 cents above the 164.85 level, but could not hold it.

But, if the TLT cannot clear 164.85, the TLT should drop to 162.50.

Technical resistance is still around 166. And also around 165. Watch this area.

Short term charts remain bearish. The TLT should open higher with the market selling off.

GLD:

Major level: 190.63
Minor level: 189.85
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

The GLD closed at 182.97. The GLD closed 1.01 lower on the day.

Watch the 183.60 level. A close today under 183.60 and the GLD should drop to 181.25. Now, if the GLD can hold the 183.50 level it should head up to 184. At this point, biased for a test of 181.25.

Short term momentum has turned bearish. The technical resistance level is 184. If the GLD can clear 184, it should head higher.

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 < HIT
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 33.99. 32.03 should be support. The XLE hit the 34.27 level, as expected.

Short term the XLE is oversold. It did move above the lower band on the 60 minute chart, which is now 31.90. This should be support on a retest.

Looking for a bounce, which we are getting. Technical support is around 33. Looking for a move up to the 36 area.

AAPL:

Major level: 150.00
Minor level: 146.88
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

Apple closed at 110.34. 112.50 should be resistance.

And watch the 109.13 level.

Also, Apple closed under the upper band on the daily chart. That price level is 126 and should now be resistance.

Apple broke under the midband on the 60 minute chart. That level is 116 and should be resistance. Apple has crossed into a downtrend on the 60 minute chart. Short term momentum is bearish.

WATCH LIST:

Bullish Stocks: RH, ALGN, FDX, MCD, DE, CAT, BYND, NKE, GH, PGR, CSX, IRBT, DKS, RDFN, VSLR, SFIX, UBER, DAR

Bearish Stocks: LMT, BDX, FLT, MLM, BA, AMP, HSY, GD, KEYS, BAX, LDOS, MAN, EFA, LAMR, CRUS BLUE