August 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.

The S & P 500 continues to try and make a new all-time high. Yesterday's high went to 3,387.59, or to within 5.93 points of the all-time high of 3,393.52.

The day managed to close 9.14 points higher. The day closed out at 3,381.99.

And the day closed out at only 33% of the range of the daily price bar. Couple that with the fact that the intra day range was only 8.37 points and you begin to see how the upthrust is beginning to wane.

The daily average true range now reads 37.40 points. So, yesterday's range was only 22% of the daily average true range.

The trend is that that the average range is decreasing.

The reading for the daily average true range was 72.8 points on June 16th. Now, that reading has shrunk to 37.40 points.

This means that the average range has dropped to about one half of what it was at the peak.

The key support area from yesterday's daily bar is in the 3,381 to 3,383 area.

Pre open, the S & P is trading about 5 points higher.

This would project to an open around the all-time high. So, watch the 3,393.52 level.

The other fact I need to point out is that the bullish percent index is now around the overbought level.

Actually, Friday it read 80.20% and yesterday it dropped to 79.40.

As I have always said, this reading is not perfect in timing a market reversal, but it does put us on notice that a reversal could be coming.

The S & P closed within 30 cents of last week's high, which was 3,387.89.

Based on the pre market trading, the high should be taken out at the open. So, watch this level.

The support from the weekly price bar is in the 3,357 to 3,364 area.

HD reported and is trading about $2.26 higher. WMT is relatively flat after reporting.

NVDA reports Wednesday after the close. And BABA reports Thursday, before the open.

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 Midband
Minor level: 24.22
Minor level: 22.66 **
Major level: 21.88 < HIT
Minor level: 21.10 **
Minor level: 19.53
Major level: 18.75

The VIX closed at 21.35. The VIX closed .70 points lower for the day.

The VIX managed to close under the 21.88 level. This would now suggest that resistance is at 22.66.

And resistance should still be at the midband which is 25.13.

Technical resistance is around 23.70. To move lower, the VIX will need two closes under 21.10.

S & P 500:

Major level: 3,437.40 < TARGET
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
Minor level: 2,929.75
Minor level: 2,851.65

The S & P closed at 3,381.99. The target for the S & P should still be up to 3,437.20.

Watch the minor 3,398.35 level. This level could offer some resistance. And the all-time high of 3,393.52.

If these levels are cleared, they should be support.

The S & P is now within 5.93 points of the all-time high. And with objectives above the high, I do expect it to be taken out.

Technical support is around 3,370.

QQQ:

Major level: 281.25
Minor level: 279.69
Minor level: 276.56
Major level: 275.00 Objective-HIT!
Minor level: 273.44
Minor level: 270.31
Major level: 268.75
Minor level: 267.18
Minor level: 264.05
Major level: 262.50
Minor level: 260.93
Minor level: 257.80
Major level: 256.25
Minor level: 254.69

The QQQ closed at 275.32. The QQQ closed 3.16 higher on the day.

The objective of 275 was hit. And the QQQ closed above the major level. Support should now be at 273.33.

The upper band is now 281.51.

Technical support is around 272.

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 157.90. The next minor level is 157.81. And yesterday was the first close above it. A close today above this level and the IWM should head up to 162.50.

156.25 should be support. And 154.70 as well.

Look for a run to the upper band on the 60 minute chart, which is 163.

Technical support is around 157.

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 HIT
Minor level: 164.85
Minor level: 163.28 **
Major level: 162.50
Minor level: 161.72
Minor level: 160.16

The TLT closed at 163.59, closing .41 higher.

Watch the major 162.50 level. If this level cannot hold, I would expect more selling pressure.

And watch to see if the TLT can close above 163.28 today. If it can, it should run up to 165.63.

164.85 should be resistance.

The 166 to 167 area is technical resistance.

GLD:

Minor level: 194.54
Major level: 193.76
Minor level: 192.98
Minor level: 191.41
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 186.50. The GLD closed $3.96 higher on the day.

The GLD is making a run to the upper band on the daily chart, which is 187.12. This was the expected move, as I mentioned yesterday.

The question is will the GLD close above the upper band? If it can't, I would expect a pullback.

Target should be to 187.50.

The 186 area should offer support.

XLE:

Minor level: 44.53
Major level: 43.75
Minor level: 42.97
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

The XLE closed at 37.97. The XLE is holding the major 37.50 level. Watch this level today. If it can't hold, I would expect a pullback.

It will need two closes above 38.28 to move higher.

37.50 should be support. And technical support is around 37 as well.

AAPL:

Major level: 412.50
Minor level: 409.38
Minor level: 403.13
Major level: 400.00
Minor level: 396.88
Minor level: 390.63
Major level: 387.50
Minor level: 384.38
Minor level: 378.13
Major level: 375.00
Minor level: 371.88
Minor level: 365.63

Apple closed at 458.43. Apple closed marginally lower.

This put Apple back above the upper band, which is 447.94. This should be support until a close under it.

By clearing the upper band, it should now be support.

I would like to see a larger pullback before entering. 456 is technical support.

WATCH LIST:

Bullish Stocks: NVDA, AAPL, ROP, HUM, DPZ, LRCX, AVGO, UNH, HD, ROK, KLAC, CMI, KLAC, FDX, DG, UPS, MMM, SWKS, TREX, TXN, MTCH, NKE, GRMN, EXPD, MNST,

Bearish Stocks: FLT, VMW, RETA, EVRG, GRA, GRA, MU, STX, NTAP, LYFT, PI, NTNX