December 8, 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 EGAN position. The result was a small profit of 3.4% for the 10-day holding period.

The S & P 500 closed 7.16 points lower on the day. The S & P closed at 3,691.96.

I mentioned yesterday that the close percentage from Friday was 100%, which meant that the odds favored Friday’s high being violated before the low.

As it turned out, the high was not violated. But, neither was the low.

The daily price bar turned out to be an inside bar, with a lower high and a higher low.

And with an inside bar, you usually get a contraction and that is what happened. The range for the day was only 18.53 points. This was only 42% of the daily average true range, which now reads 44.19 points.

Yesterday extended the streak of contractions to 19 consecutive days.

But, the weekly price bar still favors a violation of last week’s high based on the 99.9% close percentage from the weekly price bar from last week.

The upper end of the support area from last week’s price bar is around 3,667. Under that level, there is support around 3,647.

Pre open, the S & P is trading about 14 points lower.

This projects to an open around 3,678 or about 11 points above the upper end of the support area from last week’s weekly bar. Watch this level on a sell off.

The projected open would also be just under yesterday’s low, which was 3,678.88.

Watch how the market reacts at the open to the low. A break and I would expect a drop to test the 3,667 area.

COUP reported and is trading about $15 higher.

This afternoon, we hear from 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 21.30. The VIX closed .51 points lower. The 21.88 continues to offer resistance.

Yesterday, was the second close under 21.10, which suggests the VIX should drop to 18.75. The higher levels should still be resistance. But, watch the major 21.88 level. If the VIX can close above this level, then it would head higher.

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 3,691.96. The S & P closed 7.16 points lower.

The objective for the S & P is still to the 3,749.80 level.

Support should still be at the 3,632.65 level. Watch the minor 3,671 level. This level should be support.

3,665 should be technical support.

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 307.25. The QQQ closed 1.73 higher. The QQQ hit the 306.25 target we have been calling for … and managed to close above it.

Support should be at the 304.69 and 306.25 levels. The next minor level is 307.81. Two closes above this level and the QQQ should test 312.50.

Technical support is also 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 188.38. The IWM closed .18 higher on the day.

At this point, watch the minor 189.06 level on the upside. The IWM will need to close above this level to head higher.

The IWM will still need two closes above 189.06 to move up to 193.75.

187 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 156.60. It closed 1.40 higher. This put the TLT back above the major 156.25 level.

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.

The TLT should test the midband on the 60 minute chart.

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 174.89. The GLD closed 2.57 higher on the day.

Watch for support at the 172.70 level.

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. If the GLD can clear this level, I would expect it to continue higher.

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 .95 lower on the day. But, it is still above the midband on the daily chart, which is 38.76. This level should be support now.

And break under it, and the XLE should head lower.

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 43.84.

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 123.75. Apple closed $1.50 higher.

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

123 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