June 11, 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 to pullback after clearing the midband on the daily chart. For the day, the S & P closed 17.04 points lower.

The day closed out at 3,190.14.

As I mentioned yesterday, the S & P closed at 48% of the range on Tuesday, which was a neutral reading.

It turned out that the S & P made a new daily high ... and a new daily low.

And yesterday closed at 21% of the range of the daily bar. The daily price that formed yesterday was a price bar that I have not seen for some time.

When a price makes a new high and a new low, it is called an outside day. And with the low close percentage, it is bearish.

But, yesterday's price bar was even more bearish.

That is because, not only did the bar form a new high and a new low, it also closed under the low of the day from Tuesday.

This qualifies the bar as a key reversal bar, which is even more bearish than an outside bar.

And based on the pre market trading this is certainly the case, with the S & P trading 75 points lower.

The concern I have for this market, as I have been pointing out is that the bullish percent index has been at an extreme overbought level. Yesterday, it read 92.8%, which is the highest reading all year.

The main question at the moment is this.

Does this mean we should expect a sell off that mirrors the 1,200-point drop into the March low?

At this point, the S & P rallied to above the midband, which should be support.

This should be the key level to see if it holds as support. The price level is now 2,997.93.

The prior sell off dropped to the midband and closed under it. Then it spent 4 days trading at the midband before it closed under it.

After that, the S & P dropped about 800 points into the low. So, two-thirds of the sell off happened after the midband was violated.

I will continue to monitor all levels as the market sells off.

Resistance from yesterday's daily bar is in the 3,202 area.

Assuming the pre market trading holds up through the open, the S & P should open around 3,115. This would put the market about 17 points above the midband. Watch this level to see if it holds as support.

This afternoon, we get earnings from ADBE and LULU.

Here are the Key Levels for the Markets:

$VIX:

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 27.57. It closed flat for the day.

The VIX did take out the 28.13 level, hitting a high for the day of 29.01.

The VIX should no doubt open higher. Watch the major 31.25 level. If it is breached, it would suggest more selling pressure in the markets.

S & P 500:

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
Minor level: 2,695.35
Major level: 2,656.30

The S & P closed at 3,190.14. The projected open should be around 3,115, or about 10 points under the major 3,125 level.

Support should be at the minor 3,085.95 level. And the S & P could drop to the 2,968 level and it would not affect the bull trend.

With an open under the 3,125 level, it should be resistance. So watch this level on a rally.

QQQ:

Major level: 250.00
Minor level: 248.54
Minor level: 245.31
Major level: 243.75 Hit
Minor level: 242.15
Minor level: 239.00
Major level: 237.50
Minor level: 235.91
Minor level: 232.78
Major level: 231.22
Minor level: 229.66
Minor level: 226.56
Major level: 225.00

The QQQ closed at 246.22. The QQQ closed 2.92 points higher. The QQQ made another all-time high.

The upper band on the daily chart is now 246.20. So, the QQQ is right up against the upper band, which should be resistance.

Watch the major 243.75 level for support. A break under this level and it should head lower.

The 245 area should be resistance from yesterday's daily bar.

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

The IWM closed at 146.18. The IWM will still need two closes above 151.56 to test 156.25.

With a close under 148.44 today, it should drop to 143.75.

The midband is 147.58, and the IWM closed under it. It should now be resistance.

Technical resistance should be around 148.

TLT:

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 Hit
Minor level: 158.60
Minor level: 157.03
Major level: 156.25
Minor level: 155.47
Minor level: 153.91
Major level: 153.13

The TLT closed at 160.84. With a close today above 160.16, the TLT should test 162.50.

At this point, support should be at the minor 158.60. And at the 159.38 level.

The TLT is in a downtrend on the 60 minute chart. Resistance on that timeframe is now around 164.

The TLT continues to bounce from its oversold condition as we expected.

GLD:

Major level: 165.63
Minor level: 164.85
Minor level: 163.28
Major level: 162.50 < Hit
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
Minor level: 153.91
Major level: 153.13

The GLD closed at 163.57. The GLD already hit the 162.50 level and closed above the minor 163.28 level.

A close today above 163.28 and the GLD should test 165.63.

162.50 should now be support.

The GLD broke above the midband on the 60 minute chart, which is 161. Watch for support now at that level.

XLE:

Minor level: 47.65
Major level: 46.88 HIT
Minor level: 46.09
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: 34.27

The XLE closed at 42.88. With a close today under 42.97, the XLe should drop to 40.63.

43.75 should be resistance.

And technical support should be around 38.

The XLE is pulling back from its overbought condition.

AAPL:

Major level: 350.00
Minor level: 346.88
Minor level: 340.63 **
Major level: 337.50
Minor level: 334.38
Minor level: 328.13
Major level: 325.00
Minor level: 321.88
Minor level: 315.63
Major level: 312.50
Minor level: 309.38
Minor level: 303.13
Major level: 300.00

Apple closed at 352.84. Apple closed above the $350 objective.

Watch the minor 346.88 level. A break under this level and Apple should continue to drop.

The major 337.50 level should offer support.

And technical support is around the 342 area.

WATCH LIST:

Bullish Stocks: GOOGL, TSLA, CMG, NTES, ASML, NVDA, AAPL, PAYC, LULU, LRCX, FB, ADSK, BABA, KLAC, ZM, SPOT, SWKS

Bearish Stocks: BDX, VRSN, SAFM, ROKU, AEM, THS, PFE, FGEN