August 28, 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.

Today, there is one position that does expire. And that is the short $19 call on HPQ. If I suggest an adjustment on the position, you will receive a separate email.

The S & P 500 continued its bull move yesterday. The market managed to close slightly higher on the day. The S & P closed 5.82 points higher.

The day closed out at 3,484.55.

This was the second consecutive close above 3,476.45, which now suggests the S & P should head higher.

However, the S & P needs to hold the 3,476.45 level. And this level should be support now.

The day closed out at only 49% of the range of the daily bar. This is a neutral bias, in that there is no expectation that the high or low should be violated first.

The support areas from yesterday's daily bar is in the 3,484 area, which is yesterday's close.

Pre open, the bull move continues with the S & P trading about 10 points higher.

This would project to an open around 3,494. Watch the 3,484 area on a pullback and on the upside watch for a run to yesterday's high, which was 3,501.38.

In looking at how the weekly price bar is shaping up we see that through yesterday, the weekly range is 88 points.

This is 68% of the weekly average true range, which is 130 points. If the market extended higher and hit the weekly range, it would project to a high of 3,543.

And yesterday's close is 81% of the range of the weekly bar through yesterday. And the midpoint is 3,457. A close above the midpoint would be bullish.

Assume a higher close today, this will be the 5th consecutive higher weekly close.

I do want to point out that the upper band on the weekly chart is 3,589 and is lower than the upper band on the daily chart, which is 3,657.

WDAY reported and is trading about $24 higher. ULTA reported and is trading about $34 higher.

VMW is flat after reporting.

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 24.47. The VIX closed 1.20 points higher for the day. This was the second consecutive divergence between the VIX and the S & P 500. Both closed higher.

Watch the major 25 level, which should be resistance.

This divergence puts us on alert that a pullback could be forthcoming. As a point of reference, the last time the S & P & the VIX closed for two consecutive days was on March 24th & 25th of this year.

The next day, the market extended higher. But after that day, the market sold off about 160 points.

At this point, watch the 22.66 level. The VIX will have to drop under this level today foe market to head lower.

The midband is 25.27 and should still be resistance.

S & P 500:

Major level: 3,593.60
Minor level: 3,554.55
Minor level: 3,476.45 **
Major level: 3,437.40 < TARGET HIT!!!
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 3,484.55. The S & P closed for the second day above the 3,476.45 level. The objective should now be up to 3,593.60.

This suggests that the 3,437.40 level should be support. And support is at 3,457.

Technical support is around 3,465.

QQQ:

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

The QQQ closed at 291.05. The QQQ closed .91 lower on the day.

The upper band, which is 289.91. With the QQQ above this level, it should be support. And the QQQ has now had two closes 289.06 and the objective should be up to 293.75.

Technical support is around 289.

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 155.80. Look for a move above the 156.25 level.

Look for a run to the upper band on the 60 minute chart, which is 165.

Technical support is around 155. Watch to see if the IWM can close above 157.81.

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 Target Hit!
Minor level: 161.72
Minor level: 160.16
Major level: 159.38

The TLT closed at 161.24, closing 2.79 lower. Target of 162.50 hit.

A close today under 161.72 and the TLT should continue lower.

Technical resistance is now around 163. Short term trends remain bearish.

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 HIT
Minor level: 180.47
Minor level: 178.91
Major level: 175.00

The GLD closed at 181.24 The GLD closed 2.12 lower in the day. This brings the GLD back below the major 181.25 level.

With two closes under 180.47, the GLD should drop to 175.

The upper band is 190.64 and should now be resistance.

The 180 area should be a technical support level. Watch to see if the GLD can hold this level.

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 35.80. The objective should be down to 34.37.

Watch to see if the XLE can hold the 34.37 level.

Technical resistance is at 36. And technical support should be around 35 as well. Short term, the XLE it oversold and I do expect a bounce.

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 500.04. Apple closed 6.05 lower.

Apple is still well above the upper band, which is now 472. This should be support until a close under it.

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

The 4 for 1 split is effective at August 31st. The general pattern after a split is for the stock to drift lower and then find support. Wait until after the split to enter long.

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