June 16, 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.

Yesterday, I suggested you close the short $4 call on MFA. This reduced the overall premium collected on this position to $0.95, but it allowed you to book the profit on the calls. It also frees the position up to sell more calls, which I will suggest on a bounce in the stock.

I also suggested a covered call on DXC. The alert suggested buying the stock and selling the $17 call that expires this Friday.

Yesterday, the market staged a reversal day. And the market stopped at the levels I outlined the Monday update.

For the day, the S & P 500 closed 25.28 points higher. Considering that the market opened with a bearish gap of 47.55 points, the turn around was rather impressive.

After the bearish gap, the S & P dropped to a low of 2,965.66. This was 28.10 points under the open. And the low of the day was put in at right after the open, at 9:34 EST.

From that point, the market staged its rally, hitting a high of 3,079.76. The high was hit exactly at 2:30 EST.

The range for the day was 114.10 points. This was 159% of the daily average true range, which is now 71.70 points.

And the day closed at 88% of the range of the bar. This suggests the high will be violated before the low.

The support area from yesterday's daily bar is around 3,030. Under that level is support around the 3,022 area.

Pre open, the S & P is trading about 60 points higher. This projects to an open around 3,126 or about 47 points above yesterday's high. So, the close percentage projection should be satisfied at the open.

The low yesterday tested the midband on both the daily chart and the 60 minute chart.

The midband on the daily chart is 2,999.72. Yesterday's low dropped about 35 points under the midband before the market recovered to close above it.

The midband on the 60 minute chart is 2,974. Yesterday's low of 2,965.66 dropped about 10 points under the midband before the rally began.

I point this out because we were looking for support at these levels. And the market complied.

Resistance from last week's weekly bar is in the 3,109 to 3,120 area. The market should open above the upper end of the weekly resistance level which would suggest it would now be support.

Earnings season is winding down and the most notable company reporting this week is ORCL. ORCL reports today after the close.

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 closed at 34.40. It closed 4.68% lower on the day. The VIX got as high as 44.40 before dropping 10 points.

Watch the 33.60 level. Two closes under this level and it should drop to 31.25.

Support should be around 31.

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 3,066.59. The projected open should be around 3,126 or just above the major 3,125 level.

Watch the minor 3,085.95 level for support.

Technical support should be around 3,017. And at the midband on the 60 minute chart, which is 2,974.

QQQ:

Major level: 250.00
Minor level: 248.54
Minor level: 245.31
Major level: 243.75
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 238.75. Watch the minor 239 level. Two closes above this level and the QQQ should test 243.75.

Support from yesterday's bar should be around 235.50.

The 237 area should offer technical support.

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 <
Minor level: 135.94
Minor level: 132.81
Major level: 131.25

The IWM closed at 140.99. Watch the minor 139.06 level. A close today above 139.06 and the objective should be to 143.75.

The midband, which is now 147, should be resistance.

The IWM cleared the midband on the 60 minute chart, which is 134.25. This level should now be support.

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
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 162.39. Watch the 162.50 level. If the TLT clear this level, it should head higher.

At this point, support should be at the minor 160.16.

The TLT is in a downtrend on the 60 minute chart. And the TLT is sitting right under the midband, which is 163.69. Watch how the TLT opens today in relation to the midband.

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 162.33. The GLD closed just under the major 162.50 level. Watch this level again today.

At this point, watch the 163.28 level on the upside and 161.72 on the downside.

Technical support should be at 161. A break under this level the GLD should continue lower.

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 39.94. The XLE recouped the minor 39.83 level, which does suggest it should head higher.

Watch to see if the XLE can clear 40.63.

The midband on the 60 minute chart is now 38.85 and the XLE cleared it. This should now be support.

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 342.99. A close today above 340.63 and Apple should test 350.

Watch the major 337.50 level for support.

And technical support is right at the 341 area. A break under this level and Apple should continue lower

WATCH LIST:

Bullish Stocks: AMZN, TSLA, ADBE, DPZ, AAPL, ZM, MSFT, W DG, DOCU, EA, BAND, NKLA, CNNE, ZTO

Bearish Stocks: BDX, VRSN, PEP, MDT, GH, EW, ORCL, THS, FLIR, SAGE, XNCR