October 13, 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 closing the MSFT call debit spread. The result was a gain of 68% for seven days.

The S & P 500 continued the bull move. For the day, the market closed 57.08 points higher.

The day closed out at 3,534.22. And the intra day range was 50.24 points. This was actually less than the daily average true range, which is now 57.61.

However, if you factor in the gap from yesterday's low to Friday's high, the range was 67.51 points. This actually was 117% of the daily average true range.

I bring this gap up for a reason. Namely, that gaps tend to get filled. And they become price objectives.

The first target is about one half the gap, which is around 3,490.

The second target would be to fill the gap, which is Friday's high of 3,482.34.

But with a close percentage of 69%, the odds still favor that yesterday's high should be violated before the low.

And support from yesterday's daily price bar should be around 3,517. Above this level, there is support around 3,525.

Last month's high was 3,588 and is most likely going to get tested. I say this because our objective with our resistance levels is now to the major 3,593.60 level.

So, our objective is just above last month's high.

If this level is cleared, a run to the upper band on the weekly chart would be the next viable objective.

That level is 3,653.

The weekly price bar support area is around 3,403. Above this level, there is support around 3,422.

Pre open, the S & P is trading about 8 points lower. This would project to an open around 3,526 or just above the upper level of the daily support of 3,525. Watch is this holds.

JPM reported and is trading about $2 higher.

GS reports Wednesday before the open, along with BAC. MS reports Thursday before the open.

Here are the Key Levels for the Markets:

$VIX:

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 < HIT
Minor level: 24.22
Minor level: 22.66
Major level: 21.88
Minor level: 21.10

The VIX closed at 25.07. For the day, the VIX closed .07 points higher. This created a divergence with the S & P, with both closing higher on the day.

It needs two closes under 24.22 to drop to 21.88.

The VIX still closed under the midband on its daily chart. That level is now 26.54 and should be resistance.

S & P 500:

Major level: 3,593.60 <
Minor level: 3,554.55
Minor level: 3,476.45 **
Major level: 3,437.40
Minor level: 3,398.35
Minor level: 3,320.25
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

The S & P closed at 3,534.22. This was the second close above 3,476.45. This now suggests that the target is up to 3,593.60.

The minor 3,476.45 level should now be support. And watch to see if the S & P can clear 3,554.55.

Technical support should be around 3,465.

QQQ:

Major level: 300.00
Minor level: 298.44
Minor level: 295.31
Major level: 293.75 <
Minor level: 292.19
Minor level: 289.06
Major level: 287.50
Minor level: 285.94
Minor level: 282.81
Major level: 281.25
Minor level: 279.69
Minor level: 276.56
Major level: 275.00

The QQQ closed at 294.53. The QQQ closed 8.82 higher. With this move, the QQQ already took out the 287.50 level. And closed above the major 293.75 level as well.

292.19 should now be support. And the 289 area should be support.

The QQQ cleared the midband on the 60 minute chart. That price level is now 279 and should be support. The QQQ is close to crossing into an uptrend on the 60 minute chart.

IWM:

Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50 < HIT
Minor level: 160.94
Minor level: 157.81
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

The IWM closed at 163.79. The IWM closed 1.09 higher on the day.

The minor 160.94 level should be support. The next minor level is 164.06.

The upper band on the 60 minute chart is 165. Watch how the IWM reacts at this level. The IWM is just under the upper band.

TLT:

Minor level: 169.53
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

The TLT closed at 160.60. It closed .51 higher. A close today above 160.16 and the TLT should test 162.50.

159.38 should be support.

The TLT did retest the lower band on its 60 minute chart and closed below it. The lower band is 159. Oversold at the moment. Technical support around 160.

GLD:

Minor level: 188.28
Major level: 187.50
Minor level: 186.72
Minor level: 185.16
Major level: 184.38
Minor level: 183.60
Minor level: 182.03
Major level: 181.25 <
Minor level: 180.47 **
Minor level: 178.91
Major level: 175.00 <
Minor level: 174.25
Minor level: 172.70
Major level: 171.89

The GLD closed at 180.56. The GLD closed .52 lower on the day.

The GLD needs to clear 181.25 to head higher and 180.47 should be support.

The GLD is right at the midband on its 60 minute chart. This level is 180.61. Look for a breakout or breakdown before initiating.

XLE:

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: 34.37
Minor level: 33.59
Minor level: 32.03
Major level: 31.25 HIT
Minor level: 30.47
Minor level: 28.90 **
Major level: 28.12

The XLE closed at 30.87. The XLE closed .08 higher.

If the XLE cannot hold 30.47, it should head back down. It needs to clear 31.25 to head higher.

The 30.00 area should be technical support.

Objective should be to the 33 area.

AAPL:

Minor level: 140.63
Major level: 137.50
Minor level: 134.38
Minor level: 128.13
Major level: 125.00
Minor level: 121.88
Minor level: 115.63 **
Major level: 112.50 <
Minor level: 109.13
Minor level: 103.13
Major level: 100.00

Apple closed at 124.40. Apple closed $7.43 higher.

Apple already hit the 125 level.

Apple took out the midband on the 60 minute chart. That level is 117.50 and should now be support.

WATCH LIST:

Bullish Stocks: SHOP, TTD, NVDA, NFLX, ZM, HUM, IDXX, AVGO, COST, LRCX, TWLO, FDX, DE, QDEL, WDAY, DG, TEAM, LH, BYND, UPS, LLY

Bearish Stocks: CBOE, MRL, WYNN, LVS, ICPT, DISH, MD, MDP, KIM