December 9, 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.

The S & P 500 continued its move up to the next target of 3,749.80. For the day, the S & P 500 closed 10.29 points higher.

The market closed the day at 3,702.25 or about 47 points below the objective we are now looking for.

But, by clearing 3,701.94, the S & P has now completed a three-level move off the last major bottom, which was 3,233.94.

This bottom was made on October 30th.

As a reminder, in bull markets you generally expect the bull moves to go three levels. And counter moves tend not to exceed two levels.

What is the range of a level?

Of course, that is the key. When you can measure the units, you can then craft a scenario as to how far a move should go. Or not go.

For example, if I expect a counter move to drop two levels and it drops three levels, it tells me something is changing with the market.

For the S & P, each one unit measures 156 points. So, a three-level move would be 468 points.

And if you add that to the bottom of 3,233.94, you get 3,701.94.

And yesterday, the S & P closed at 3,702.25 or .31 above the range target.

I believe I mentioned sometime ago that this should be the target for the S & P. And now we are here.

The daily bar closed at 79% of the range of the daily bar.

This puts the odds of taking out yesterday's high of 3,708.45 before the low of 3,678.83.

And the support area from yesterday's daily bar is in the 3,692 to 3,694 area.

I do want to mention that the daily average true range is contracting.

And has been contracting since it peaked out at 69.83 on November 9th. And now it reads 43.15 points.

This decreasing of the average range usually is a warning that a top is forming. At least it puts us on alert.

CHWY reported and is flat.

This 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 20.68. The VIX closed .62 points lower. Yesterday's high went to 22.25 before dropping under the 21.88 level, which we have been mentioning should be resistance.

The target for the VIX should still be down to the 18.75 level.

21.10 and 21.88 should 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 3,702.25. The S & P closed 10.29 points higher.

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.

3,694 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 308.29. The QQQ closed 1.04 higher. The QQQ had its first close above 307.81 level.

A close today above this level and the target for the QQQ should be up to 312.50.

Support should be at the 307.81 and the 306.25 levels.

Technical support is also around 306.

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 190.80. The IWM closed 2.42 higher on the day.

The IWM had its first close above 189.06. A close today above this level and the objective for the IWM should be up to 193.75.

Support should be at the 187.50 level.

189 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 157.34. It closed .74 higher. This put the TLT above the minor 157.03 level. A close today above this level and the target should be up to 159.38.

The TLT is still under the midband on the 60 minute chart. This level, which is now 158.43 and should be resistance. Watch this level on a bounce.

Still looking for a 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 < HIT
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 175.50. The GLD closed .61 higher on the day. The GLD closed above the major 175 level.

For the GLD to move higher, the GLD will need two closes above 178.91.

The GLD is right at the midband on its 60 minute chart. That price level is 175.78.
Watch to see if the GLD can clear this level. If it can't, it should pull back.

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 40.27. The XLE closed .59 higher on the day. But, it is still above the midband on the daily chart, which is 38.71. This level should be support now. And it holds, expect more movement to the upside.

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 now 44.42.

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 124.38. Apple closed $.63 higher.

Target now should still be up to the 125 level. And Apple came to within 2 cents of the target.

The 121.88 level should still be support.

123.50 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