September 9, 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.

The sell-off continued after the long Holiday weekend, picking up where it left off on Friday.

Tuesday, the S & P closed 95.12 points lower. The market closed out at 3,331.84.

And the daily price bar closed at only 5% of the range of the bar. This suggests the low of 3,329.27 should be violated before the high at 3,379.97.

And the resistance area from yesterday's daily price bar should be in the 3,352 to 3,355 area.

The intra day range was only 50.70 points. But, that was also because the market gapped down at the open 55 points.

Yesterday's low took out the prior weekly low, which was 3,349.63. This level should now be resistance.

Yesterday's price action also took out the monthly support level. The closest support level is around 3,370.

At this point, a test of last month's low is possible. That price level is 3,284.53. Yesterday's low is within 45 points of last months low.

The other key level from the monthly chart to monitor is the upper band, which is 3,284.67.

At this point, the S & P is still about 50 points above it and it should be support. So, watch this level on a continued sell off.

The question now is where could this sell off end?

One of the measurements I use is the major resistance levels. Each major level measures 156 points.

The S & P has already exceeded that level. And typically a two-level move is a normal pullback in a bull market.

A two-level move measures 312. A two-level move off the top would put the
S & P around 3,276. This would be around 5 points below the major 3,281.20 level.

Yesterday's low is within 53 points of this measurement.

This is a key level to watch for a reversal.

Pre open, the S & P is trading about 31 points higher. This projects to an open around 3,362. This would be just above the daily support level. Watch to see if that level can hold.

COUP reported and is trading about $8 lower. And LULU reported and is trading about $16 lower.

Wednesday after the close we get earnings from RH and ZS.

And finally, Thursday afternoon we get earnings from CHWY and PTON.

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 31.46. For the day, the VIX closed .71 points higher. This was a gain of 2.31%.

The VIX held the major 31.25 level. For the VIX to move lower, it will need two closes under 30.47.

And the VIX is right up against the upper band on the 60 minute chart. This price level is 31.58 points. The VIX closed just under it.

Watch this level today. A drop under this level and the S & P should head higher.

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 3,331.84. Watch the minor 3,398.35 level today. A close today under this level and the S & P should drop to 3,281.

Also, the minor 3,320.25 level should be a support level. If this level can't hold, I would expect the S & P to continue down to 3,281.

3,360 is the midband on the 60 minute chart and the S & P is juts below it. It should be resistance. The S & P would have to clear the midband to head higher.

QQQ:

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
Minor level: 273.44
Minor level: 270.31
Major level: 268.75
Minor level: 267.19

The QQQ closed at 269.95. The QQQ closed 13.63 points lower. This was a drop of 4.85%.

Watch to see if the QQQ can hold the major 268.75 level. Also, the key short term level should be 270.31. If the QQQ can reclaim this level, it should bounce.

275 is s key technical level and the QQQ is just below it. If the QQQ cannot reclaim this level, I would expect further selling pressure.

IWM:

Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
Minor level: 154.70
Minor level: 151.56
Major level: 150.00 HIT
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

The IWM closed at 149.86, closing 2.94 lower. The IWM hit the major 150 level.

At this point, the IWM will need two closes under 148.44 to move lower.

The 151.56 level should be resistance. And the minor 154.70 level should also be resistance.

The IWM is still trading above the midband on the daily chart. The midband is 146.67. This level should be support. Watch to see if it can hold.

TLT:

Major level: 171.88
Minor level: 171.10
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

The TLT closed at 163.74, closing 1.00 higher. The TLT closed just above the minor 163.28 level. A close today above 163.28 and the TLT should test 165.63.

Technical resistance is now around 166. And also around 165. Watch this area.

Short term charts remain bearish.

GLD:

Major level: 190.63
Minor level: 189.85
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 < HIT
Minor level: 180.47
Minor level: 178.91
Major level: 175.00

The GLD closed at 181.29. The GLD closed .35 lower on the day. The GLD hit the 181.25 level already. Watch to see if this level can hold.

Short term momentum has turned bearish. The technical resistance level is 183.

Two closes under 180.47 and the GLD should drop to 175.

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

The XLE closed at 33.60. The XLE hit the 34.37 objective as expected.

Watch the minor 33.59 level. Two closed under this level and the XLE should drop to 31.25.

Short term the XLE is oversold. It is right at the lower band on the 60 minute chart, which is 33.82.

AAPL:

Major level: 150.00
Minor level: 146.88
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

Apple closed at 112.82. Apple closed 8.14 lower. Apple hit the 1121.50 objective.

Also, Apple closed under the upper band on the daily chart. That price level is 123.94 and should now be resistance.

Technical support is right at 112.18. Watch to see if Apple can hold this level.

WATCH LIST:

Bullish Stocks: ORLY, ZM, AVGO, FDX, MMM, CAT, NLE, ALXN, ZEN, ALB, CHWY, KR, DKS, WMGI

Bearish Stocks: BDX, BIB, BA, IBM, CB, TRV, DLTR, LW, CVS, PSX, VLO, OMC, HSIC, EOG, KEX, WBA, NBR, FANG, JBL, CSOD