May 5, 2020 - MDT Pro Tips A.M.

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.

I suggested a short term covered call on a new position yesterday. The stock was CLVS and the suggestion was to buy the stock and sell the $8 call that expires this Friday.

The S & P 500 ended the day closing 12.03 points higher. The day closed out at 2,842.74.

Based on the 19% close percentage on Friday and the pre market trading, we expected Friday's low to be taken out right at the open. This certainly was true with a bear gap open of 15.70 points.

After stopping at the low for the day, which was 2,797.85, the market traded in a narrow range until it ran higher into the close.

The S & P hit the high for the day just before the close. The high was 2,844.24, which was about 1 point below the midpoint of the daily bar from Friday.

As it turned out, the daily bar closed at 97% of the range for the day.

This does now suggest that yesterday's high should be violated before the low.

And the support area from yesterday's daily bar is in the 2,821 to 2,829 area.

Pre open, the S & P is trading about 31 points higher. This projects to an open around 2,873, which would put the open around 31 points above yesterday's high.

Overhead resistance still remains at the 61.8% retracement level of the down move, which is 2,934.49 and at the midband, which is now 2,922.22.

These levels are now within 12 points of each other.

The lower end of the weekly resistance level is 2,842 and with the market opening above it, this level should now be support.

The next weekly level is 2,888. Watch this level on a move higher.

The range for the day was only 46.39 points. The daily average true range is now 84.64 points and has been dropping.

SWKS is trading about $2.19 higher after reporting.

This afternoon, we hear from KLAC and DIS. Wednesday morning, we get earnings from SHOP.

And Wednesday afternoon, we get earnings from ETSY, GRUB, and TWLO.

Thursday afternoon, we hear from FLT, ROKU, OLED, and YELP.

Here are the Key Levels for the Markets:

$VIX:

Major level: 43.75
Minor level: 42.97
Minor level: 41.40
Major level: 40.62
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

The VIX closed at 35.97. The VIX got as high as 40.32 before moving lower to close just under the minor 37.72 level.

If the VIX can close under 36.72 points today, I would expect the VIX to drop to 34.28.

Minor support is around 35 and if the VIX breaks under this level, it should head lower.

The 37 area is technical resistance.

S & P 500:

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 2,842.74. With a projected open around 2,873, the minor 2,851 level should be support on a pullback.

And two closes above 2,851.65 and the S & P should test 2,929.75.

Technical support is around 2,825. And if the S & P can hold 2,872, look for it to move higher.

QQQ:

Minor level: 220.31
Major level: 218.75
Minor level: 217.19
Minor level: 214.06 **
Major level: 212.50 <
Minor level: 210.93
Minor level: 207.81
Major level: 206.25
Minor level: 204.69
Minor level: 201.56

The QQQ closed at 215.22. A close today above 214.06 and the QQQ should move up to 218.75.

The 214.06 level should offer support.

Technical support should also be around 215. 221 is resistance.

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

The IWM closed at 125.68. The IWM closed again just above the major 125.14 level. At this point, 123.44 should be support.

And two closes above 126.56 and the IWM should test 131.25.

Technical support is around 123. And the 128 area is technical resistance.

TLT:

Major level: 169.53
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 167.16. The TLT has now had two closes under 167.97, which suggests the TLT should drop to 165.63.

The 168 area should be technical resistance. And support is around 165.

The TLT has topped out in the short term.

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 160.34. The next minor level on the upside is 160.16. Two closes above this level and the GLD should test 162.50. And yesterday was the first close above it.

If the GLD cannot hold the minor 160.16 level, I would expect it to drop.

Support should be at 157. And technical resistance is around 161.

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 37.09. If the XLE can clear the major 37.50 level, it should be support.

And if the XLE has two closes above 38.28, it should move up to 40.63.

Like the S & P, the XLE is still in an uptrend on its 60 minute chart. This does suggest we will see another rally.

Technical support should be around 36 and resistance at the 40 level.

AAPL:

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
Minor level: 271.88
Minor level: 265.63
Major level: 262.50

Apple closed at 293.16. Apple needs to clear the 290.63 to head higher. And Apple had its first close above it. A close today above this level and Apple should head up to 300.

291 should offer technical support. And technical resistance is around 300.

WATCH LIST:

Bullish Stocks: GOOGL, HUM, ADBE, DXCM, AAPL, ZBRA, LULU, AGN, MSFT, COUP, CRM, SPOT, SPLK, SWKS, GILD, DVA, CRUS

Bearish Stocks: HE, SCI, SDOW, PSQ, GBDC