July 14, 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 week started out with profit-taking in all markets.

The S & P 500 closed 29.82 points lower. The day closed out at 3,155.22.

Even though the sell-off was less than the gain on Friday, there are a few indications that we may see more profit-taking.

First off, the S & P satisfied the close percentage from last week's weekly bar. As I mentioned, last week's close percentage was 97.5%, which indicated that last week's high should be violated before the low.

Last week's high was 3,186,82 and yesterday's high of 3,235.32 took it out by 48.50 points. So, that has been satisfied already.

I always prefer a high close percentage and a pullback to within the body of the bar. You can buy within the body of the price bar with an objective to take out the prior high.

The second reason that would justify more selling pressure is because the QQQ sold off against the upper band on its daily chart.

As you know, the NASD and the QQQ have been the market leaders.

And both the QQQ and the NASD Composite breached the upper band only to close back inside yesterday.

This would suggest that the upper band would be resistance. This level is certainly one to keep an eye on now. A failure to move back above the upper band would indicate further selling.

Even though the S & P is not at its upper band, I would suspect that a sell-off in the NASD market would push the S & P lower.

The S & P is above the midband on its daily chart, so I still would expect that level to be support. A violation would void that.

But, the daily chart for the S & P is close to crossing into an uptrend. If that can happen, it would suggest the market would move higher.

The resistance level from yesterday's daily price bar is in the 3,180 to 3,192 area. With the market below these levels, they should be resistance.

The lower end of the weekly support level is around 3,151.

Yesterday's close was about 4 points above it. So, watch this level today.

Pre open, the S & P is trading about 8 points higher.

This projects to an open around 3,163 or about 14 points above yesterday low.

With a close percentage yesterday of only 7%, the odds favor a test of the low.

Watch the low of 3,149.43 and of course, the weekly support level of 3,151.

Wednesday before the open, we hear from GS and BK.

Thursday morning, we get earnings from BAC and DPZ., along with MS.

And Thursday, after the close we get earnings from NFLX.

Here are the Key Levels for the Markets:

$VIX:

Major level: 37.50
Minor level: 36.72
Minor level: 35.16
Major level: 34.38
Minor level: 33.60
Minor level: 32.03 **
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

The VIX jumped 17.96%. It closed at 32.19, up 4.90 on the day.

The VIX closed above the minor 32.03 level. This now suggests that if the VIX closes above this level today it should head up to 34.38.

Watch to see if this level holds today. A break under it and it would then be resistance.

Watch the 30.95 area. The VIX is overbought short term.

S & P 500:

Major level: 3,281.20
Minor level: 3,242.15
Minor level: 3,164.00 **
Major level: 3,125.00 < Hit
Minor level: 3,085.95
Minor level: 3,007.85
Major level: 2,968.80
Minor level: 2,929.75
Minor level: 2,851.65
Major level: 2,812.50
Minor level: 2,773.45
Minor level: 2,695.35
Major level: 2,656.30

The S & P closed at 3,155.22. The S & P closed back under the minor 3,164 level.

The S & P continues to trade around the minor 3,164 level.

A close today under this level would suggest further selling. The S & P would need to recoup this level to move higher.

Short term charts remain bullish, so I am biased for a reversal to the upside.

QQQ:

Major level: 268.75
Minor level: 267.18
Minor level: 264.05
Major level: 262.50
Minor level: 260.93 **
Minor level: 257.80
Major level: 256.25
Minor level: 254.69
Minor level: 251.56
Major level: 250.00
Minor level: 248.54
Minor level: 245.31
Major level: 243.75

The QQQ closed at 258.54. The QQQ actually took out the 268.75 objective before closing 5.43 points lower for the day.

The QQQ also moved above the upper band on the daily chart and closed within the bands. The upper band is now 260.61. This is a key level to watch.

Watch the minor 260.93 level. A closes today below this level and the QQQ should test 256.25

Technical support is also around 256.

IWM:

Major level: 156.25
Minor level: 154.70
Minor level: 151.56
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
Minor level: 142.19
Minor level: 139.06 **
Major level: 137.50 < Hit
Minor level: 135.94
Minor level: 132.81
Major level: 131.25

The IWM closed at 139.52. If the IWM did close above 139.06 for the second day. So, a test of 143.75 is possible.

Technical resistance is now around 141. The IWM did clear this level, but could not hold it.

138 area is technical support.

TLT:

Major level: 168.75
Minor level: 167.97
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

The TLT closed at 166.88. The TLT closed back above the minor 166.41 level. A close today above 166.41 and it should test 168.75.

165.63 should now be support. Watch this level. A break under
his level and the TLT should head lower.

GLD:

Major level: 171.89
Minor level: 171.11
Minor level: 169.54 **
Major level: 168.75 < HIT
Minor level: 167.98
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

The GLD closed at 169.40. The objective for the GLD should be up to 171.89.

The minor 167.98 level should be support.

Technical support should still be at 169.

XLE:

Minor level: 44.53
Major level: 43.75
Minor level: 42.97
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

The XLE closed at 35.35 The XLE had its second close above the minor 35.15 level, so it should test 37.50.

Watch for a move up to the 36 area. If the XLE can clear this level, it should head higher. If it can't clear 36, then I would expect a drop.

The 34 area should be technical support.

AAPL:

Major level: 387.50 < Hit
Minor level: 384.38 **
Minor level: 378.13
Major level: 375.00
Minor level: 371.88
Minor level: 365.63
Major level: 362.50
Minor level: 359.38
Minor level: 353.13
Major level: 350.00
Minor level: 346.88
Minor level: 340.63
Major level: 337.50

Apple closed at 381.91. Apple closed 1.77 lower on the day.

Apple got as high as 399.82 before selling off almost $20. 396 is the upper band on the daily chart. A retest and failure and Apple should head lower.

And technical support is around 380. Watch this level today.

WATCH LIST:

Bullish Stocks: AMZN, TSLA, GOOGL, SHOP, REGN, NFLX, NTES, ADBE, DXCM, NVDA, DPZ, AAPL, LRCX, COUP, VRTX, WIX

Bearish Stocks: ORLY, LMT, MA, NOC, CTAS, ULTA, MCD, BURL, SYK, MMM, AAP, ZBH, IBM, HS, CVXADS, FTDR, FANG, DIN, AJRD, FUN, HFC