August 19, 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.

Yesterday, I suggested closing the short $145 call on CTXS. By closing the short call, you captured 86% of the profit on the position. And the long $140 call should still be open. I will look to close this position on a further push higher in the stock.

I also suggested you close the HOG debit spread. As I mentioned in the alert, the stock was approaching the midband and I preferred to book the profit and move on. The gain was 72% for 15 days.

The S & P 500 not only made a new all time high, but also closed above the high.

But, as you know, we were looking for this happen, In fact, I mentioned it again on John's webinar last week.

The S & P closed at 3,389.78. The market closed 7.79 points higher. And the day closed at 79% of the range of the daily bar.

And the range for the day expanded, with a range of 24.91 points.

This was greater than the Monday's range, but still less than the 36.51 daily average true range.

But, based on the closing percentage, we still expect the high to be violated before the low.

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

Pre open, the S & P is trading relatively flat.

The question for us now is simple. Does this move continue? Or does the market reverse after making a new high?

As you know, we still have objectives for the market higher than where we are now. The active objective is 3,437.40, which is still around 47 points above yesterday's close.

And the upper band on the daily chart is 3,624.41, which is also a logical objective for the market.

The bearish case for the market is that the ranges have been shrinking. This also happened at the top in February. Having said that, the daily average true range, which is 36.51 points is still higher than the reading of 28.43 at the prior top.

The bullish percent index is reaching overbought levels, which is also putting us on alert that a top could be forming.

It now reads 78.8%, after peaking at 80.2% two days ago.

This is a warning sign, but it is not a perfect timing tool.

Today is our webinar and I hope to see you at the webinar.

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 21.51. The VIX closed .16 points higher for the day.

The VIX managed to close under the 21.88 level, but it closed above the 21.10 level. Watch for resistance at 22.66.

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

Technical resistance is around 21.80. 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 3,389.78. The target for the S & P should still be up to 3,437.20.

Watch the minor 3,398.35 level again. This level could offer some resistance. If the S & P can clear this level, it would suggest the target of 3,437 should be hit.

Watch the prior high of 3,393 for support.

Technical support is around 3,380.

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 277.97. The QQQ closed 2.65 higher on the day.

Yesterday was the first close above 276.56. A close today above this level and the QQQ should hit 281.25.

The upper band is now 282.46 and the QQQ should make a run to test it.

Technical support is around 275.

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 156.39. The next minor level is 157.81. The IWM still needs two closes above 157.81 to head higher.

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 164.76, closing 1.17 higher.

Watch the major 162.50 level. If this level cannot hold, I would expect more selling pressure. Also, the TLT will need to clear 164.84 to head higher,

165.63 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 188.18. The GLD closed $1.68 higher on the day.

The GLD is making a run to the upper band on the daily chart, which is 187.73, and managed to close above it.
This suggests the GLD could head higher. But, watch the upper band.

Target of 187.50 was also hit.

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 37.49. The XLE is trying to hold 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.

36.72 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 462.25. Apple closed 3.82 higher.

Apple is still above the upper band, which is 448.05. 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