July 30, 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 ended the day closing 40 points higher. The S & P closed out at 3,258.44.

The range for the day was 37.52 points. Even though this was about 10 points greater than the prior two days, it was still below the daily average true range.

The daily average true range is 46.86 points, so yesterday's range was 80% of the average.

The support area from yesterday should be in the 3,243 to 3,246 area.

And with the daily price bar closing at 83% of the range for the day, the odds favor the high being violated before the low.

Yesterday, I wrote about the close percentage and the price expectation.

I mentioned that when Monday closed at 93% of the range for the day, the odds favored the high being violated before the low. And Tuesday, the
S & P took out the high and then made a lower low.

So, the close percentage was satisfied.

Then Tuesday closed at 8% of the range for the day. So, the odds favored the low being violated.

And that is what transpired yesterday.

So, why did this fail?

One of the reasons is that the market had a bullish gap open. The market gapped 8.78 points higher and opened right in the middle of the resistance area from Tuesday.

In fact, this is what I wrote yesterday ... "And the resistance level from yesterday is in the 3,226 to 3,230 area."

The market opened at 3,227.22, which was right in the middle of this area.

As it turned out, the open was the low of the day. From that price, the market rallied all day to a high of 3,264.74, before closing at 3,258.44.

Pre open, the S & P is trading about 24 points lower. This projects to an open around 3,234 or about 7 points above yesterdays low.

Watch the low of 3,227.22 for support. If it is violated, the market should head lower.

Also, watch the VIX. It did close back under the midband. The midband is 24.92 and it could be tested.

This afternoon we hear from the tech leaders. Tomorrow could be extra volatile.

AMZN reports after the close on Thursday. Along with GOOGL, FB, 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 24.10. The VIX closed 1.34 points lower for the day.

This was the first close under the minor 24.22 level. A close today under 24.22 and the VIX should drop to 21.88.

The VIX continues to trade around the midband on the daily chart. That price level is now 24.92. And this is right around the major 25 level, which should be resistance.

Watch how it trades around the midband.

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 3,258.44. Watch the minor 3,242.15 level. The market should open below it, so watch this level on a rally.

Support should be at 3,164.

Technical support is around 3,238.

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

The QQQ closed at 259.77. The QQQ closed 2.96 points higher on the day.

Watch the 257.80 level for support. A break under this level and the QQQ should drop.

Support is in the 259 area.

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 149.35. This put the IWM above the midband on the daily chart, which should now be support. That price level is 145.84.

To move higher, the IWM will need to clear 150.

The minor 148.44 level should be 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 169.99, closing .29 lower. A close today above 169.53 and the TLT should test 171.88. And now 171.88 should be the objective.

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: 184.38 <
Minor level: 183.60
Minor level: 182.03
Major level: 181.25
Minor level: 180.47
Minor level: 178.91
Major level: 178.13
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

The GLD closed at 185.13. Watch the major 184.38 level. The GLD is above the upper band on the daily chart.

The upper band is 178.89. A would expect a pullback.

Watch the 183.60 level on the downside.

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 37.68. At this point, the XLE will need two closes above 38.28 to move higher.

To move lower, the XLE will need two closes under 36.72.

The 37 area should 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 380.16. Apple closed $7.15 higher.

Objective should be to 387.

Apple is oversold and I expect a bounce. And it did bounce as expected.
Watch the 377 area for support. A break under it and Apple should head lower.

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