July 28, 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 reversed yesterday and closed higher. For the day, the market closed 23.78 points higher.

The day closed out at 3,239.41. And the high for the day was 3,241.43.

Once again, our predetermined support and resistance levels affected the market.

For example, I mentioned this yesterday ... "The support area from Friday's daily price bar is in the 3,214 to 3,217 area."

As it turned out, yesterday's low was 3,214.25 which was right at the lower support level from Friday.

After stopping at the low, the market ran up to the high, which was 3,241.43.

I mentioned this yesterday ... "On a continued move higher watch the weekly midpoint of 3,240 for possible resistance."

So, both the low and high for the day ended up being right at previously identified levels.

The range for yesterday was 27.18 points. This was the second consecutive contraction. The daily average true range is 48.39 points and yesterday's range was only 56% of the average.

The daily bar closed at 93% of the range for the day. This does suggest that yesterday's high should be violated before the low.

I would have preferred a close above 3,242.15 as this would have voided the bearish bias. However, the close percentage does suggest a move higher.

And the VIX should also be helpful to confirm a move higher. This is because the VIX close just under the midband again. A break lower would suggest higher prices to follow.

The support area from yesterday's daily bar is in the 3,227 to 3,230 area.

Pre open, the S & P is trading about 11 points lower.

This would suggest an open around 3,228 which would be right in the middle of the support area from yesterday. Watch to see how the market reacts.

SHOP reports Wednesday before the close. FB reports after the close on Wednesday.

AMZN reports after the close on Thursday. Along with GOOGL, AAPL, SHAK, and ZEN.

Here are the Key Levels for the Markets:

$VIX:

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
Minor level: 22.66
Major level: 21.88

The VIX closed at 24.74. The VIX closed 1.10 points lower for the day.

To move lower, the VIX needs two closes under 24.22.

And the VIX closed back under the midband on the daily chart. That price level is now 24.82.

This does suggest that the midband should be resistance. As you know, if the VIX breaks, the S & P should head higher.

Look for technical resistance around 26.

S & P 500:

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
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

The S & P closed at 3,239.41. Watch the 3,242 level. I would expect a test of this level on a rally.

The market should open around 3,228. The lower end of the support area is 3,227. So, watch to see if this holds as support.

A break under this level and the S & P could test the low of 3,214.25.

Technical support is around 3,223.

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 Hit
Minor level: 254.69
Minor level: 251.56 *
Major level: 250.00

The QQQ closed at 260.12. The QQQ closed 4.56 point higher on the day.

This now suggests that if the QQQ can close above 257.80 today, it should test 262.50. Also, support should be at 257.80.

Technical support is around 258.

IWM:

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

The IWM closed at 147.60. Watch the 150 level on the upside. It could offer resistance.

On the downside, support should be at the 145.31 level.

Having said that, the IWM continues to trade right at the midband on the daily chart. That level is 145.89 and the IWM managed to close above it. It should be support.

The 145 area should be technical support.

TLT:

Major level: 171.88
Minor level: 171.10
Minor level: 169.53 **
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

The TLT closed at 169.11, closing .63 lower.

Watch to see if the TLT breaks under 168.75. If it does, it should get lower.

168.75 should now be support. And 170 area is technical resistance.

GLD:

Major level: 178.13 HIT
Minor level: 177.35
Minor level: 175.78
Major level: 175.00
Minor level: 174.25
Minor level: 172.70
Major level: 171.89
Minor level: 171.11
Minor level: 169.54
Major level: 168.75
Minor level: 167.98
Minor level: 166.41
Major level: 165.63
Minor level: 164.85

The GLD closed at 182.23. Yesterday closed above the 178.13 level. And the upper band on the daily chart.

The GLD is overextended and should pull back.

The upper band is 177.63 and the GLD closed just above it. The key now is what the GLD does now at the upper band.

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 Target - HIT
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 37.55. The XLE managed to close above the major 37.50 level again. It will need two closes above 38.28 to head higher.

The 36.72 level should now be support. 37.50 should also be support.

AAPL:

Major level: 400.00
Minor level: 396.88
Minor level: 390.63
Major level: 387.50
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

Apple closed at 379.24. Apple closed $8.78 higher.

If Apple can close above 378.13 today, it should head up to 387.50.

Support should be at the major 378.13 level.

374 is technical support.

WATCH LIST:

Bullish Stocks: ISRG, GWW, HD, WST, TWLO, BABA, PANW, LIN, RMD, LH, MKC, CMI, FFIV, TTWO, KMB, TSCO, MUSA, GNRC, CHKP, DQ

Bearish Stocks: STZ, BA, ADP, VMW, CBOE, ADC, VFC, PLNT, WBA, CZR