October 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.

There are a few positions that expire today. The first two are the short calls, secured against long stock position.

The first one is the short $6 call on CLVS. And the second position is the short $18 call on BOX.

If either position is adjusted, you will receive a separate email.

The final position is the put debit spread on QRVO. These options will no doubt expire today. Unfortunately, QRVO is trading well above the long put strike and will expire worthless.

The loss will be about 50% based on the fact that there was a profit on the long $125 call and by selling the $110 put.

The S & P 500 ended the day closing 5.33 points lower. The market closed out at 3,483.34.

After opening with almost a 35 point bear gap, the S & P managed to find support at 3,440.89, before rallying 42.45 points into the close.

The daily price bar ended up closing at 88% of the range for the day.

This does suggest that the high should be violated before the low.

And the support level from yesterday should be around 3,465 to 3,458.

I do need to point out that yesterday's low of 3,440.89 stopped 3.49 points above the major 3,437.40 level.

This was the price level I mentioned yesterday that should be support.

Pre open, the S & P is trading about 14 points higher.

This projects to an open around 3,497 or about 8 points above yesterday's high of 3,489.08. This would mean that the close percentage should be satisfied right at the open.

Watch for support around 3,493 and then at the prior high at 3,489.

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 26.97. The VIX closed .57 point higher. The VIX did exceed the 28.13 objective I called for yesterday.

The VIX hit a high of 29.06 before closing at 26.97. A close today under 27.35 and the VIX should drop to 25.

The VIX did clear the midband, but managed to move to it. The midband is now 26.71. Watch for a break under the midband.

Technical resistance is still around 27.

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 3,483.34. The minor 3,476.45 level should be support.

And the minor 3,476.45 level should now be resistance.

Technical support is right at 3,483. Also, the 60 minute chart has crossed into a bull trend.

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 290.10. The QQQ closed 1.96 lower. The QQQ had its first close under 292.19. The QQQ needs to reclaim 292.19 to head higher.

The 293.75 should now be resistance.

The QQQ is close to crossing into an uptrend on the 60 minute chart. Technical support is around 289.

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 162.75. The IWM closed above the major 162.50.

The minor 160.94 level should be support. And two closes above 164.06 and the IWM should head up to 168.75.

The upper band on the 60 minute chart is 167, and the IWM should retest it.

The IWM has already crossed into an uptrend on the 60 minute chart. 162 is technical support.

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 < 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

The TLT closed at 161.84. It closed .28 lower. The TLT hit the 162.50 objective.

At this point, two closes under 161.72 and the TLT should drop to 159.

The TLT hit the midband on the 60 minute and sold off. Look for it to be resistance.

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 178.92. The GLD closed .65 higher on the day.

Biased for a drop to 175, with resistance still at 178.91 ... and the GLD closed a penny above it. Watch this level today.

After trading right on the midband on the 60 minute chart, the GLD broke and closed under it. This level should still be resistance. The midband is 180.

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 30.89. The XLE closed .37 higher. The XLE needs to fail at 30.47 to head lower.

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.

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 120.71. Apple closed $.48 lower.

Watch the minor 121.88 level. Biased for a drop to 112.50.

Apple took out the midband on the 60 minute chart. That level is 117 and should now be support. Watch to see if this level holds.

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