August 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 short $17.50 call on PRA did expire on Friday. The profit on the sale of the options was booked. I will look to sell more calls this week.

I mentioned yesterday that a down gap against an uptrend is usually an opportunity to buy.

The S & P continued to move higher on Friday. The day closed out at 3,397.16. The market closed 11.65 points higher.
And once again, the daily range contracted. The range for the day was only 20.65 points.

This was 59% of the daily average true range, which measures 34.94 points.

And the day closed at 86% of the range of the daily bar, which does suggest the high of 3,399.96 should be violated before the low of 3,379.31.

And pre open, the S & P is trading about 29 points higher. Based on this trading and assuming it holds up through the open, the market should open about 26 points above Friday's high. This would satisfy the close percentage projection right at the open.

If the market sells off, look for support at around the 50% level of the gap, which would be around 3,413. If this does not hold, look for the high to hold.

Below these levels, the support is around the 3,390 area.

The weekly price bar closed 24.31 points higher. And the weekly bar closed at 93.8% of the range of the weekly bar, which also projects that the high of the weekly price bar should be violated before the low.

The weekly high was also Friday's daily high, so this level should be violated right at the open.

The support area from last week's weekly price bar is in the 3,389 area. If this level does not hold, there is also a support area around 3,377.

I do want to point out that the weekly price bar also had a major contraction. The range for the week was only 46.27 points.

This was only 34% of the weekly average true range, which is 132.41.

This was the 9th consecutive weekly contraction. We know we will get an expansion after all these contractions and perhaps we will this week.

This afternoon, we get earnings from PANW. Tomorrow after the close, we get earnings from CRM.

Wednesday, after the close, we get earnings from SPLK and NTAP. Thursday morning we get earnings from TIF, DG, and DLTR.

And Thursday, after the close, we get earnings from ULTA, VMW, and WDAY.

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 22.54. The VIX closed .18 points lower for the day, reversing the move from Thursday.

With the market opening higher, the VIX should open lower. Watch the 22.20 technical level.

A break under it and it should be resistance. Also, watch the 22.66 resistance level.

If the VIX breaks under 21.88, it should be resistance.

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 3,397.16. Friday's high of 3,399.96 took out the minor 3,398.35 level, but could not close above it.

The projected open this morning should be above the 3,398 level. This would suggest this would be support on a pullback.

Also, based on the pre market trading, the S & P should be within 11 points of the objective.

Watch the objective of 3,437.40.

Technical support is around 3,387.

QQQ:

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: 267.18
Minor level: 264.05
Major level: 262.50
Minor level: 260.93

The QQQ closed at 281.87. The QQQ closed 1.94 higher on the day.

Watch for support at the 279.69 level. And at the major 281 level.

The upper band is now 285.34 and the QQQ should make a run to test it.

Technical support is around 280.

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 154.61. Watch the minor 154.70 level. I would expect the IWM to recoup this level. If it can;t, the IWM should drop to 150.

Look for a run to the upper band on the 60 minute chart, which is 164.

Technical support is around 155.

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 166.20, closing .99 higher. Watch to see if the TLT can clear the 155.41 level. It should be resistance, so if it can clear this level, the TLT should head higher.

164.85 should be support. Technical resistance is at 167.

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 182.03. The GLD closed right on the minor 182.03 level. A close today under it and the GLD should drop to 181.

If the GLd can hold 182.03, it should head higher to test the upper band again.

The upper band is 189.04 and should now be resistance.

Technical resistance is around 183.

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 36.03. Biased for the XLE to test 34.37. It would have to clear and hold 36.72 to move higher.

Technical resistance is at 37. And technical support should be around 35 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 497.48. Apple closed 24.38 higher.

Apple is still above the upper band, which is 457.82. 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. 496 is technical support.

WATCH LIST:

Bullish Stocks: AMZN, TSLA, GOOGL, NVDA, AAPL. NTES, DPZ, LULU, COST, W, RNG, FB, PANW, BABA, CVNA, DE, FDN, FDX, WING, JNJ, ETSY, CHKP

Bearish Stocks: BDX, FLT, MLM, CB, CDW, GWRE, POST, BAX, RL, OMC