December 2, 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 out the long December 4th - $118 call on Apple. Including the profit on the short $122 that was bought back, the overall return on the spread was 184% for just under two weeks.

I also suggested adding a covered call on PS. The alert suggested buying PS and selling the December monthly $17.50 call on the position.

The market continued its move to the upper band on the daily chart. For the day, the S & P 500 closed 40.82 points higher.

The day closed out at 3,662.45.

And the daily price bar closed at 51% of the range of the daily bar. The close percentage is deceptive because the market gapped 24.24 points higher at the open. And the low for the day was the open.

If I adjust for the gap, the close percentage works out to 64%.

This may not seem like a big difference, but it suggests the high of yesterday should be violated before the low. The 51% close percentage would suggest a doji bar and that could mean there was indecision.

Pre open, the S & P is trading about 12 points lower.

This projects to an open around 3,650. The projected open would be around the 50% level of the open gap, which is 3,651.72. Watch this level at the open to see if the market can hold this level.

If this level can't hold, then a gap fill is possible. The high on Monday, which was 3,634.18, would fill the gap.

The gap is also right at the minor 3,632.65 level. And this is the key price level at the moment. So, watch for support at this level.

The S & P already took out the November high. That price is 3,645.99. This should also be a support level.

CRM reported and is trading $13.61 lower pre market. VEEV is trading $9.20 lower after reporting.

And BOX reported and is trading about $1.32 lower. This is why I like to sell high priced calls ahead of earnings. I will look to close out the $19 calls and sell more on a bounce.

SNOW and SPLK report after the close. CBRL and DG report Thursday before the open.

Thursday after the close, we get earnings from DOCU, RH and ULTA.

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 20.77. The VIX closed .20 points higher.

The objective for the VIX should be to the 18.75 level. The 21.88 level should still be resistance.

But, the VIX and the S & P did diverge yesterday. They both closed higher on the day.

22.66 should be resistance.

Technical resistance is around 21.80, which is around the major resistance level.

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 3,662.45. The S & P closed 40.82 points higher. The S & P did recoup the major 3,632 level. This now suggests that if the S & P can close above this level today, it should head up to 3,749.80.

Support should be at the 3,662.45 level.

3,630 should be technical support.

QQQ:

Major level: 306.25
Minor level: 304.69
Minor level: 301.56 **
Major level: 300.00 Hit
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
Minor level: 282.81
Major level: 281.25
Minor level: 279.69

The QQQ closed at 303.46. The QQQ closed 3.84 higher. With a close today above 301.56, the QQQ should test 306.25.

Support should be at the 301.56 and 300 levels.

Technical support is also around 300.

IWM:

Major level: 187.50
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
Minor level: 157.81
Major level: 156.25
Minor level: 154.70

The IWM closed at 182.70. The IWM closed 1.68 higher on the day.

The objective for the IWM should still be to 187.50. But, it needs to reclaim the minor 181.25 level. And it did that yesterday.

I am looking for a retest of the upper band on the 60 minute chart. That level is 192.

182 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
Minor level: 155.47
Minor level: 153.91
Major level: 153.13

The TLT closed at 157.50. It closed 2.36 lower. With a close under 158.60 today, the TLT should drop to 156.25.

The TLT dropped under the midband on the 60 minute chart. This level, which is now 159, should be resistance.

Technical resistance is between 157 and 159.

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 170.18. The GLD closed 3.51 higher on the day.

A close today above 169.53 and the GLD should head up to 171.88.

The GLD is bouncing from its ovesold condition.

The GLD is now oversold. It is right under the lower band on the 60 minute chart. That level is 166.98. The GLD closed above the lower band.

And the midband should be resistance, which is 176.60.

XLE:

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
Minor level: 30.47
Minor level: 28.90
Major level: 28.13

The XLE closed at 36.93. The XLE closed .17 higher on the day. The midband on the daily chart is 38.99 and the XLE is under it. The XLE needs to recoup the midband to head higher.

Also, watch the 37.50 level. If the XLE can clear this level, it should head higher.

I still expect another rally because the XLE did manage to close above the upper band on the 60minute chart. Support should be around 32.50.

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 122.72. Apple closed $3.67 higher.

Target now should be up to the 125 level.

I did suggest booking the profit on the long $118 call. This was mainly due to the fact that the calls expire this Friday.

WATCH LIST:

Bullish Stocks: TTD, GOOGL, TSLA, RH, LRCX, ASML, AVGO, COST, ZBRA, PANW, COUP, ADSK, ANET, ULTA, DE, KLAC, GS, URI, TEAM, SQ, V, ITW, HON, AMP, KSU, MCK, CAT

Bearish Stocks: AMT, BIDU, BAX, K, CNC, FE