December 7, 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.

Friday, I suggested you close out the short December $19 call on BOX. The profit from selling the calls worked out to 81% for one week.

The amount of call premium collected on this position is now $1.05 per share. We were able to take advantage of the inflated implied volatility heading into earnings. On a bounce, I will look to sell more calls.

The S & P 500 continued its move to the next target, which as you know, is 3,749.80.

Friday, the S & P closed 32.40 points higher. The market closed the day out at 3,699.12.

This puts the S & P within 50 points of the objective.

The daily price bar closed at 100% of the range of the daily price bar.

This suggests that high should be violated before the low. And support from Friday’s daily bar is in the 3,685 area.

The range for the day was 28.26 points. The range was only 61% of the daily average true range.

This was now the 18th consecutive day where the daily range was less than the daily average true range.

This suggests to me that we need to be mindful that a reversal could happen.

For the week, the S & P closed 60.77 points higher. And like we have seen with the daily price bars, the weekly price bar also contracted. The weekly range was 78.3% of the weekly average true range.

This was now the third consecutive weekly bar that has contracted.

Support from the weekly price bar is in the 3,666 area. Under this level, there is support around 3,647.

Pre open, the S & P is trading about 8 points lower. This projects to an open around 3,691. Watch the daily price bar support around 3,685 on a sell off.

Earnings do continue this week. This afternoon, we get earnings from CBRL and COUP.

Tomorrow, we hear from AAP and CHWY.

Wednesday afternoon, we get results from ADBE and RH. And Thursday, we hear from COST, AVGO, and ORCL.

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 20.79. The VIX closed .49 points lower. The 21.88 continues to offer resistance.

Friday’s high went to 21.15. And we now have our first close under 21.10. A close today under this level and the VIX should test 18.75.

21.88 should be resistance. And 22.66 as well.

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 3,699.12. The S & P closed 32.40 points higher.

The objective for the S & P is now to the 3,749.80 level. And the market is within 50 points of it.

Support should still be at the 3,632.65 level. Watch the minor 3,671 level. A move above this level and it should be support.

3,676 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 305.52. The QQQ closed 1.24 higher. The objective for the QQQ should be for a test of 306.25. And the QQQ is within 1 point of it.

Support should be at the 301.56 and 300 levels. And watch the minor 304.69 level as well for support.

Technical support is also around 304.

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 188.20. The IWM closed 4.28 higher on the day.

The objective for the IWM should still be to 187.50. TARGET HIT!

And Friday, the IWM closed above the minor 189.06. A close above this level and the objective should be to 193.75.

I am looking for a retest of the upper band on the 60 minute chart. That level is 196.

184 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 155.20. It closed 2.31 lower.

The TLT dropped under the midband on the 60 minute chart. This level, which is now 158, should be resistance. Watch this level on a bounce.

156 is a minor resistance level.

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 172.32. The GLD closed .49 lower on the day.

The GLD will need to reclaim 172.70 to head higher. A failure at this level and the GLD should head lower.

The GLD continues to bounce from its oversold condition. Watch for the GLD to stall and head lower from this bounce.

The midband on the 60 minute chart should be resistance. That level is 175.87 and should be resistance.

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 40.63. The XLE broke above and closed above the midband on the daily chart, which is 38.82. Not only did the XLE close above the midband, but it closed right on the 40.63 level.

The next minor level is 41.40. Two closes above this level and the XLE should head up to 43.75.

I mentioned to expect a retest of the upper band on the 60 minute chart because the XLE had taken out the upper band. And that is what s happening now. The upper band is 43.28.

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 122.25. Apple closed $.69 lower.

Target now should be up to the 125 level. And the 121.88 level should be support.

121.50 should be technical support.

WATCH LIST:

Bullish Stocks: TTD, GOOGL, TSLA, LRCX, RH, ASML, IDXX, MSCI, AVGO, RNG, MSTR, SPOT, PANW, FDX, MLM, KLAC, TEAM, GS, HON, CAT, ZS

Bearish Stocks: AMT, PNW, ED, K, EVRG, EQC