May 29, 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 two trades. The first was to close out the CTXS debit spread. The result was a gain of 52% for the two-day holding period.

The second trade was an adjustment to the OSTK position. The idea was to buy back the call that expires today and roll out to next Friday. This resulted in a gain of $1.10 per share for the calls that expired today. And you should have picked up another $0.75 per share for selling the calls that expire next Friday.

And finally, there is one position that expires today and that is the short $12 on MOS. MOS settled just above the strike price, so hold the position and if an adjustment is suggested, you will receive a separate email.

The market gapped higher at the open for the third consecutive day. After gapping higher, the S & P ran to a high of 3,068.67 before profit-taking came in.

After topping out, the market sold off 39 points to close at 3,029.73.

For the day, the S & P closed 6.40 points lower.

And the daily bar closed at 14% of the range of the daily bar. This suggests that the odds favor the low of 3,023.40 should be violated before the high.

And pre open, the S & P is trading about 6 points lower.

This projects to an open right around yesterday's low of 3,023.40. Watch to see how the market reacts at the low.

The weekly bar through yesterday has a range of 99 points. This is 59% of the weekly average true range, which is now 168.21.

And the midpoint is 3,019.21 and yesterday's close is about 10 points above the midpoint.

Watch the midpoint level on a sell off. With a break under yesterday's low, I would expect support around the midpoint.

Today also closes out the May monthly price bar. The range for the month is 302 points. This is actually greater than the monthly average true range, which is 262 points.

I point this out because it would suggest that the high and low for the month are in.

CRM reported and is trading about $5.75 lower. COST is trading about $6.60 lower.

And ULTA is relatively flat after reporting.

Here are the Key Levels for the Markets:

$VIX:

Minor level: 39.84
Minor level: 38.28
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 < Hit
Minor level: 27.35
Minor level: 25.78
Major level: 25.00

The VIX closed at 28.59. The VIX closed 0.97 points lower yesterday.

To move higher, the VIX will need two closes above 28.91.

I am still looking for resistance around the 28.91 level.

The minor 28.91 level should be resistance.

Technical resistance is around 30.

S & P 500:

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
Minor level: 2,617.25
Minor level: 2,539.06
Major level: 2,500.00

The S & P closed at 3,029.73. Yesterday was the second close above 3,007.85.

This suggests that the objective should be to 3,125. And 3,007.85 should offer support.

Support is also at the major 2,968 level.

There is technical support right around the 3,000 level.

QQQ:

Major level: 237.47
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
Minor level: 217.19
Minor level: 214.06
Major level: 212.50
Minor level: 210.93

The QQQ closed at 229.99. The QQQ is still holding the 229.66 level.

But, to move higher at this point, the QQQ needs to clear 231.22.

The 229 area should be techncial support.

And 229 should be support from yesterday's daily bar.

IWM:

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
Minor level: 129.69
Minor level: 126.56
Major level: 125.00
Minor level: 123.44
Minor level: 120.31
Major level: 118.75

The IWM closed at 139.70. Yesterday's high was 144.73. So, the 143.75 was taken out.

And the IWM reversed. The midband is 147.63 and the IWM is just under it. If the IWM cannot clear the midband, look for a pullback.

If the IWM cannot clear 142.19, it should head lower.

The 137 area should be technical support.

TLT:

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
Major level: 159.38
Minor level: 158.60
Minor level: 157.03
Major level: 156.25
Minor level: 155.48

The TLT closed at 162.43. We were looking for a move to 162.50. And the TLT has now closed under it.

At this point, if the TLT has two closes under 161.72 it should drop to 159.

The TLT is in a downtrend on the 60 minute chart. Resistance on that TLT timeframe is now around 163.

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
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 161.72. The GLD came back to close right on the 161.72 level. It needs to clear this level to head higher.

163.28 should be resistance. And 162.50 as well.

Technical support is around 160. Watch this level. If the GLD drops under this level, it should head lower.

And technical resistance is right around 162.50.

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 38.94. The objective for the XLE should now be up to 40.63. And the XLE is within one point of it.

The major 37.50 level should be support. And the minor 39.83 should also be support. A break under 39.83 and the XLE should head lower.

Technical support should be around 39.

AAPL:

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
Minor level: 296.88
Minor level: 290.63
Major level: 287.50
Minor level: 284.38
Minor level: 278.13
Major level: 275.00

Apple closed at 318.25. The objective for Apple should be up to 325.

The minor 315.63 level should be support.

The 318 area should now be technical support. Watch to see if Apple can hold this level today. If it can, it should head higher.

WATCH LIST:

Bullish Stocks: AMZN, GOOGL, SHOP, TSLA, ADBE, DPZ, NVDA, AAPL, LULU, COUP, ADSK, SPLK, MSFT, CRM. EHTH, DOCU, PYPL

Bearish Stocks: PG, PGR, TRI, ORCL, BCE, MDLZ, FTS, TAP