October 20, 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.

I did suggest you sell this week's $6 call on CLVS. This now brings the premium collected to $.85.

Yesterday, the S & P 500 sold off 56.89 points. The S & P closed out at 3,426.92.

And the daily bar closed at only 8% of the range of the daily bar. This does suggest there should be follow through to the downside and the low should be violated before the high.

Yesterday's low was 3,419.92 and the high was 3,502.42. And the resistance level from yesterday's daily price bar is in the 3,460 area.

I keep mentioning the range contractions we have been seeing in the market. And how they ultimately will lead to expansions.

And yesterday the market had that expansion. The range for the day was 82.50 points. This was 149% of the daily average true range. This qualifies as a bearish long-range candle. And the midpoint should be resistance. The midpoint is 3,461.

Pre open, the S & P is trading about 18 points higher.

This projects to an open around 3,445. So, watch the midpoint on a rally.

The key at the moment is last week's low, which is 3,440.89. The S & P did break below the low, and close below it.

The projected open this morning should be just above it.

If the market sells off under the weekly low, look for the move to continue to the downside.

Also, watch the monthly support level of 3,400 to see if it holds on a sell-off.

Once again, the divergence between the S & P and the VIX preceded this sell-off. As a reminder, this divergence happened on Friday, when they both closed to the upside.

IBM reported last night and is trading about $5 lower.

Today after the close, we hear from NFLX. Wednesday after the close, we get earnings from CMG and TSLA.

And the week ends with AMZN reporting Thursday after the close, along with INTC.

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

The VIX closed at 28.18. The VIX closed 1.77 points higher. The VIX closed just above the major 28.13 level.

It is now back above the midband, which is 26.83 and should now be support.

Watch the minor 28.91. Two closes above this level and the VIX should head up to 31.25.

Technical support is at 27.40.

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 3,426.92. This put the S & P back under the major 3,437.40 level.

Watch the minor 3,398.35 level on the downside. Two closes under this level and the S & P should drop to 3,281.

Technical support is right at 3,405. With the 60 minute chart crossing into a bull trend, I would expect a rally. This is the midband on the 60 and I would expect this level to hold.

If it can't, I would expect lower prices to follow.

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 283.80. The QQQ closed 4.71 lower. The sell-off out the QQQ under the minor 285.94 level.

A close today under 285.94 and it should test 281.25.

The 289.06 should now be resistance.

Like the S & P, the QQQ crossed into an uptrend on its 60 minute chart. And the midband is 280.50 and should be support.

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 160.41. The IWM closed 194 lower on the day.

With a close today under 160.94, look for a drop to 156.

The IWM has already crossed into an uptrend on the 60 minute chart. 154 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 160.78. It closed .61 lower.

Look for a drop to 159.38. 161.72 should be resistance.

The TLT hit the midband on the 60 minute and sold off. Look for it to be resistance. Technical resistance is at 161.50.

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 178.39. The GLD closed .09 higher on the day.

Biased for a drop to 175, with resistance still at 178.91. The GLD needs to reclaims 178.91 to head higher.

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. And technical resistance is still around 179.

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 29.55. The XLE closed .64 lower. With a close today under 30.47, the XLE should drop to 28.

It needs to recoup 30.47 to head higher.

The 27.00 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 115.98. Apple closed $3.04 lower.

Watch the 112.50 level. Biased for a drop to this level. To drop even further, Apple will need two closes under 109.13.

Apple took out the midband on the 60 minute chart. This level is 116.88 and should now be resistance.

WATCH LIST:

Bullish Stocks: MELI, ZM, NOW, ROP, RH, POOL, CTAS, ALGN, COUP, FDX, DE, DOCU, WDAY, ADSK, MCD, VRSK, PYPL, BAND, TSCO, ETSY

Bearish Stocks: NOC, LHX, CBOE, MRK, RCL, CPA, VLO, CF, LYFT