September 24, 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.

The selling pressure intensified yesterday. For the day, the S & P 500 closed 78.65 points lower.

The S & P closed at 3,236.92. And the close percentage for the day was only 5%, which does suggest that the low should be violated before the high.

Yesterday's low was 3,232.57, which was only 4.35 points below the close.

The resistance level from yesterday should be in the 3,278 area.

And the range for the day ended up at 90.78 points. This certainly qualified the day as a bearish long candle. The intra day range yesterday was almost 150% of the daily average true range, which is 61.14 points.

With this type of candle formation the midpoint, which is 3,278 should be resistance. And the high as well, which is 3,323.35. These levels will often hold as resistance for a long period of time.

And yesterday, the down to up volume read 8.15 to 1. This is the largest reading since the 5.56 reading on the 21st.

But, neither of these qualified as a selling climax. For a selling climax to happen, I expect a reading of at least 9 to 1.

I have mentioned the bullish percent index readings and yesterday, this index dropped further. It now reads 46.20%.

A major reversal tends to happen when this index reads 20% or less.

All this adds up to the fact that the selling pressure is most likely not over.

I also have mentioned how the 60 minute chart for the indexes have crossed into downtrends, which is further indication that more selling should follow.

I was looking for a bounce up to the midband on the 60 minute S & P chart, but the market could not even manage that.

Pre open, the S & P is about 20 points lower.

This would project to an open around 3,216. Watch yesterday's low on a rally.

Thursday afternoon, we get earnings from COST.

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 28.58. For the day, the VIX closed 1.72 points higher.

The VIX managed to close above the major 28.13 level. Watch the 28.91 level. Two closes above this level and the VIX should head up to 31.25.

The key now will be if the VIX can hold the midband on the daily chart. It closed just above it once again.

That level is now 26.11.

"If the VIX holds support here and heads up, look for that downleg I mentioned, If not, expect a test of the midband for the S & P on the 60 minute chart." Worked out as I mentioned yesterday.

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 3,236.92. The key for the S & P for today will be the 3,242.15 level.

A close today under 3,242.15 would suggest a drop to 3,125.

It is getting close to the lower band on the 60 minute chart. That level is 3,212. You should know the patterns around the lower band, so I will not repeat them.

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 264.16. The QQQ closed 8.32 lower. This was a drop of 3.05%.

Watch the 267.19 level. A close today below this level and the QQQ should test 262.50.

The QQQ broke under the midband on the 60 minute chart. That price level is 277.50 and should now be resistance.

The lower band on the 60 is 253.51 and should be the objective.

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 144.07, closing 4.42 lower.

Not only did the IWM fail to hold the 150 level, it closed just above the 143.75 level and took out the midband on the daily chart.

The midband is now 146 and the IWM broke hard under ti. It should now be resistance.

145.67 is the lower band on the 60 minute chart and the IWM took that out as well.

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 164.49. The 164.85 level is the key short term level. And with a close today under it, the TLT should drop to 162.50. But, with the market selling off the TLT should get a bounce.

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

The 165 area is still technical resistance.

Short term charts remain bearish.

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 174.79. The GLD closed 3.86 lower on the day.

The GLd did drop to the 175 level, as we expected. Next minor level is 174.25. Two closes under this level and the GLD should drop to 171.89.

The GLD is at that lower band on the 60 minute chart. That level is 173.91. Watch to see if it can hold.

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 30.21. If the XLE closes under 30.47 today, it should drop to 28.12.

Short term the XLE is oversold. It did move above the lower band on the 60 minute chart, which is now 29.69. This should be support on a retest.

Looking for a bounce at the lower band.

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 107.12. Apple managed to close $4.69 lower.

With a close today under 109.13, Apple should drop to 100.

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.

The lower band is 99 and that should be the objective.

WATCH LIST:

Bullish Stocks: CHTR, ZM, AVGO, FDX, PODD, MCD, DE, DG, UNP, MMM, EDU, CAT, TT, ALXN, GH, Z, ALB, PGR, EMN, PENN, SWAV

Bearish Stocks: BDX, WAT, GS, GD, HSY, CB, TRV, CYBR, MIDD, DLTR, ADC, HSIC, UPRO, KRC, THS, HXL