June 8, 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.

Friday, you should have exited four positions. Three exits were through alerts and the fourth was an automatic exit because the calls were assigned.

I will start with that position. The short $18 call on OSTK was assigned and your shares were sold at that price. The end result, including the calls that were sold against the position, was a return of 14.8% for 2 1/2 weeks.

The cash gain if you traded the suggested 300 shares was $783.

The next position was the sale of PRA. The return was 11.4% for 4 days. The cash return if you traded the suggested 400 shares was $652.

I suggested you close the AGNC position. The return was 7.4% for just under 3 months. The cash return was $294 if you traded the suggested 300 shares. The return does not include the monthly dividends, which you should have collected as well.

The final position was closing the AMN debit spread. This deal worked out to a 4-day return of 83%. The cash return if you traded the suggested 6 lot was $870.

Friday saw a massive meltup in the markets. The S & P 500 closed 81.58 points higher. The week closed out at 3,193.93.

The intra day range was 47.88 points because of the gap open of 51.49 points.

I wrote last week that there was a series of contractions and we know that an expansion will follow.

I wrote Friday morning about how the weekly price bar through Thursday had contracted as well.

In fact, I wrote this:

"Through yesterday, the weekly price bar has a range of 99.40, which is about 64 points less than the weekly average true range, which is 163 points."

And as it turned out, the weekly price bar had a range of 180 points, which exceeded the weekly average true range. The weekly average true range is now 169.07 points.

In one day, the market moved about one half the weekly average true range.

The S & P is now 230 points of the all-time high, which is remarkable considering the fact that the country is still in the midst of a pandemic.

Even more remarkable is that the QQQ actually made a new all-time high. Friday's high of 240.30 took out the prior high of 236.93.

The NASD Composite is close to taking out its all-time high. Friday's high hit 9,845.69 and the all-time high is 9,838.37.

So, the NASD continues to be the strongest market. The question now is will the S & P follow and make a new high?

It is possible, but at this point the bullish percent index now reads 90.80 %. 80% is considered overbought, so you can see how frothy the market has become.

Also, the prior all-time high for this reading was on April 9th, which read 91.6%.

This indicator is not perfect in timing a reversal. It puts us on alert that a reversal could be forthcoming.

Support from Friday's daily bar is in the 3,188 area. Under that level, the next support would be between 3,179 to 3,183.

The weekly price bar closed at 90.1% of the range of the weekly bar. This suggests that the odds favor the high being violated before the low.

And the support area from the weekly bar is in the 3,116 to 3,121 area.

This afternoon, we get earnings from CASY and COUP. Thursday, after the close we get earnings from ADBE and LULU.

Pre open, the S & P is trading about 12 points higher.

This projects to an open around 3,206 or about 5 points below Fridays high of 3,211.72.

Friday's high is also the weekly high and we expect that level to be violated.

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 24.52. The VIX closed 1.29 points lower on Friday.

This was the first close under the major 25 level. The VIX will need two closes under 24.22 to drop to 21.88.

At this point, look for resistance at 25.78. And technical resistance is around 27.50.

I mentioned Friday that the VIX is right above the midband on the daily chart. That level is now 22.68. If the VIX does not break under the midband, it could rally and a pullback in the market would be expected.

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 3,193.93. At this point, if the S & P closes above 3,164 today, it should head up to 3,281.20.

And the 3,164 level should be support. Watch for resistance at the minor 3,203 level.

The 3,125 level should be support.

There is technical support right around the 3,100 level.

QQQ:

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
Minor level: 223.42
Minor level: 220.31
Major level: 218.75

The QQQ closed at 239.69. Watch for support at the 237.50 level

A close above 239 today and the QQQ should move up to 243.75.

Two closes under 235.91 and the QQQ should drop to 231.

And the 236 area should be technical support.

And 238 area should be support 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
Minor level: 135.94
Minor level: 132.81
Major level: 131.25

The IWM closed at 150.18. The IWM gapped up and closed above the midband on the daily chart and the major 150 level.

The midband is 147.56, which should now be support.

Two closes above 151.56 and the IWM should test 156.25.

The 147 area should now be technical 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 Hit
Minor level: 155.47
Minor level: 153.91
Major level: 153.13

The TLT closed at 156.11. The TLT hit the 156.25 objective.

To move lower, the TLT would need to close back below 155.47.

The TLT is in a downtrend on the 60 minute chart. Resistance on that timeframe is now around 160.

The TLT is oversold and a bounce should be coming.

GLD:

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 GLD closed at 158.01. With a close under 158.60, the GLD should drop to 156.25.

The major 159.38 level should be resistance.

Technical resistance is now around 160. Short term momentum is now bearish.

XLE:

Minor level: 47.65
Major level: 46.88
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 44.84. This was the first close above 44.53. A close today above 44.53 and the XLE should move up to 46.88.

43.75 should be support. And the minor 42.97 level should also be support.

And technical support should be around 42.

AAPL:

Major level: 337.50
Minor level: 334.38
Minor level: 328.13 **
Major level: 325.00 HIT
Minor level: 321.88
Minor level: 315.63
Major level: 312.50
Minor level: 309.38
Minor level: 303.13
Major level: 300.00
Minor level: 296.88
Minor level: 290.63
Major level: 287.50

Apple closed at 331.50. Apple closed $9.18 higher for the day.

At this point, if Apple closes above 328.13 today, it should move up to 337.50.

The minor 321.88 level should still be support. And technical support is around the 320 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