December 15, 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 PS position based on the tender offer they received. The trade yielded a 7.4% return for 13 days.

I also suggested another covered call position. And it was on IQ. The idea was to buy IQ and sell the $23 call that expires this Friday.

This now means there are three positions that expire this Friday. I will continue to monitor and make adjustments if necessary.

Now onto the markets.

The S & P 500 sold off yesterday. For the day, the S & P closed 15.97 points lower.

The market closed the day at 3,647.49.

And the daily bar did expand. The intra day range was 51.77 points. This was 120% of the daily average true range, which is now 43.10 points.

After gapping 11.81 points higher at the open, the market ran up to a high of 3,697.61 before selling off.

The high, of course, took out Friday's high of 3,665.91, and fell short of last week's high of 3,712.39 by just under 15 points.

As I said yesterday, watch to see if the market could take out last week's high. Because the market fell short, you expected a pullback.

And that is what happened. After stalling at the high, the S & P dropped 51.77 points to a low of 3,645.84.

This was just about 4 points below Friday's midpoint of 3,649.66.

The resistance level from yesterday's daily bar is in the 3,661 area. Above this level, there is resistance at 3,671, which is yesterday's midpoint and should be strong resistance.

Pre open, the S & P is trading about 25 points higher.

This projects to an open around 3,672 or right around the midpoint from yesterday. This is a key level for the market today.

If the market can hold yesterday's midpoint, then we should see continued buying pressure. If it can't, look for a test of yesterday's low of 3,645.84.

The projected open is also right around the weekly support area. This area is still valid and is in the 3,673 to 3,679 area.

Earnings do continue this week, but the companies reporting are slowing down as we head towards the end of this earnings season.

JBL reports Thursday after the close, along with FDX. DRI and WGO report Friday before the open.

Here are the Key Levels for the Markets:

$VIX:

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 **
Minor level: 19.53
Major level: 18.75

The VIX closed at 24.72. The VIX closed 1.41 points higher. Yesterday's high went to 24.82 or about 18 cents below the major 25 level, before dropping to close under the major 25 level.

The VIX still needs two closes under 24.22 today to 21.88. But, the 25 level should still be resistance, until it is violated.

The midband on the 60 minute chart, which is 25.74 should still be resistance.

S & P 500:

Major level: 3,749.80 <
Minor level: 3,710.75
Minor level: 3,632.65 **
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

The S & P closed at 3,647.49. The S & P closed 15.97 points lower.

The S & P formed a bearish long range candle yesterday. The midpoint, which is 3,671.73, should be resistance. So, watch this area today.

Support should still be at the 3,632.65 level. And 3,671 is a minor resistance level.

The 3,623 area should be a technical support area.

QQQ:

Major level: 312.50
Minor level: 310.94
Minor level: 307.81
Major level: 306.25 HIT
Minor level: 304.69 **
Minor level: 301.56
Major level: 300.00
Minor level: 298.44
Minor level: 295.31
Major level: 293.75
Minor level: 292.19
Minor level: 289.06
Major level: 287.50
Minor level: 285.94

The QQQ closed at 304.04. The QQQ closed 2.19 higher.

The QQQ hit a high of 306.05. It took out the objective by 5 cents.

The 301.56 level should be support. And for the QQQ to continue higher, it will need two closes above 307.81.

Technical support is also around 303. And technical resistance is around 305.

IWM:

Major level: 193.75 <
Minor level: 192.19
Minor level: 189.06 **
Major level: 187.50 HIT
Minor level: 181.25
Minor level: 176.56
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94

The IWM closed at 189.93. The IWM closed .22 higher on the day.

The objective for the IWM should still be up to 193.75. And the IWM went to within 63 cents of the objective.

And it would suggest that support should be at the 187.50 level.

188 should be technical support.

TLT:

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
Minor level: 158.60
Minor level: 157.03 **
Major level: 156.25 Hit
Minor level: 155.47
Minor level: 153.91
Major level: 153.13

The TLT closed at 158.33. It closed .44 lower. This was the second close above the 157.03.

The objective for the TLT should be up to 159.38.

Watch the 156.25 level. A break under this level and the TLT should head lower.

The TLT is right at the midband on the 60 minute chart. This level is 158.27. Watch for either a break of this level, or for it to hold as support.

GLD:

Minor level: 182.03
Major level: 181.25
Minor level: 180.47
Minor level: 178.91
Major level: 175.00
Minor level: 174.25
Minor level: 172.70 **
Major level: 171.88
Minor level: 171.10
Minor level: 169.53
Major level: 168.75
Minor level: 167.97

The GLD closed at 171.54. The GLD closed .95 lower on the day. The GLD closed back under the minor 171.88 level.

I would expect 171.88 to offer resistance. And two closes under 171.10 and the GLD should drop to 168.75.

The GLD is under the midband on its 60 minute chart. That price level is 175.
This level should be resistance.

And watch the 175 area for technical resistance as well. To move higher, the GLD needs to clear 171.88.

XLE:

Major level: 43.75
Minor level: 42.95
Minor level: 41.40
Major level: 40.63 < HIT
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 39.68. The XLE closed 1.44 lower on the day. This was the first close above 41.40. The XLE will still need two closes above 41.40 to move higher.

And a close today under 39.83 today and the XLE should drop to 37.50.

But, the XLE is above the midband on the daily chart, which is 38.48 and should be support.

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 121.78. Apple closed $.63 lower.

Target now should still be up to the 125 level.

Watch for support at 121.88.

The 121.00 area should provide technical support.

WATCH LIST:

Bullish Stocks: TTD, NOW, ROP, RNG, TWLO, SPOT, ROKU, PANW, SEDG, CVNA, GS, SQ, TTWO, DIS, ETSY, BAND, FIVN, BIDU, JNJ, PKI, MTCH

Bearish Stocks: AMT, RETA, ETR, PNW, D, ED, K, BMY, CNC, SO, ELS, NUVA