While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to 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.
CURRENT POSITIONS:
GOGO Long at $19.93
Total Premium Collected $1.95
ASNA Long at $14.20
Total Premium Collected $0.75
DUST Long $4.50
Total Premium Collected $0.70
SNAP Long at $14.54
Total Premium Collected - $1.65
OI Long Feb $19 call @ $1.70
OI Short Feb $22 call @ $0.55
UNIT Long at $19.35
UNIT Short Oct $20 call @ $0.45
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The short $20 call on UNIT expires this afternoon. Yesterday, UNIT settled just above the strike price. Leave the position as is and if an adjustment is to be made, I will send out a separate email.
Yesterday saw continued selling pressure. The S & P 500 closed 40.32 points to the downside, closing at 2,768.78.
The range for the day was 50.86 points, which was about 15 points higher than the average true range.
And for the day, the S & P 500 closed at 27% of the daily bar. This puts the odds of violating the low before the high at around 70%.
The sell off yesterday was not unexpected. And this was for two reasons.
The first is from the technical standpoint. And that was simply that the S & P 500 had been trading under the lower extreme bollinger bands on its 30 minute and 60 minute charts.
The odds are very high after the lower bands are violated that a retest of the lower band will happen.
And I think that is what happened yesterday.
The lower band on the 60 minute chart is 2,747.08. If the market can hold above this level, I would expect some movement to the upside. A break again under the lower bands would tell us that another retest should occur.
The second reason was because on Wednesday the S & P 500 and the VIX had another divergence. Both closed to the downside.
This usually signals a turn is possible.
The resistance area for yesterday's daily bar is in the 2,780 to 2,785 area.
Even though we have seen high volatility this week, the weekly bar is shaping up to be an inside bar.
In other words, the S & P 500 has not violated either the high or low at this point.
Should an inside bar form this week, it would signal that more volatility should follow.
Last week's low was 2,710.51. And yesterday closed about 59 points above it.
Also, the low this week so far has been 2,749.03 and that was made on Monday.
The open this week was 2,763.83. This would be a level to watch today.
And pre open, the S & P 500 is trading about 12 points higher, so we should open today above this week's open. So watch this level if the market does sell off.
And watch the 2,822 level from last week's weekly bar.
Continue to monitor the levels as I mentioned.
Here are the Key Levels for the Markets:
$VIX:
Major level: 25.00
Minor level: 23.44
Minor level: 20.31
Major level: 18.75 <
Minor level: 17.19
Minor level: 14.06 **
Major level: 12.50
Minor level: 10.94
Minor level: 7.81
Major level: 6.25
The VIX closed at 20.09. To move lower, the VIX will need two closes under 17.19. And to move higher, it will need two closes above 20.31.
I am looking for resistance at 21.88. If the VIX does turn back from that level, it should drop.
15.63 should be minor support.
SPX:
Major level: 2,939.50
Minor level: 2,927.28
Minor level: 2,902.83
Major level: 2,890.60
Minor level: 2,878.40
Minor level: 2,854.00
Major level: 2,841.80
Minor level: 2,829.60
Minor level: 2,805.20
Major level: 2,793.00
Minor level: 2,780.78
Minor level: 2,756.33 ***
Major level: 2,744.10
Minor level: 2,731.90
Minor level: 2,707.50
Major level: 2,695.30
2,758.80 should offer support. There should also be support at 2,756.33.
If these levels can hold, a test of 2,793 is possible.
Short term charts do remain bearish, so another drop should happen before heading higher. It looks like we got that yesterday.
Technical resistance is at 2,780. If the market can clear this level, I would expect it to head higher.
QQQ:
Major level: 193.75
Minor level: 192.19
Minor level: 189.06
Major level: 187.50
Minor level: 185.94
Minor level: 182.81
Major level: 181.25
Minor level: 179.69
Minor level: 176.56
Major level: 175.00
Minor level: 173.44
Minor level: 170.31 **
Major level: 168.75
The QQQ closed at 173.18. 171.88 should offer minor support. If the QQQ does close under 171.88 for two days, it could drop to 162.
But, watch for support at 171.88.
IWM:
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94
Minor level: 157.81 **
Major level: 156.25
Minor level: 154.69 **
Minor level: 151.56
Major level: 150.00
The IWM closed at 155. Biased for a move higher, but the IWM is trading just under the midband on the daily chart. That level is 158.
The IWM does need to clear the midband to head higher.
153.13 should offer support.
The lower band on the 60 minute is 151.46.
TLT:
Major level: 115.63
Minor level: 115.24
Minor level: 114.45
Major level: 114.06
Minor level: 113.67
Minor level: 112.89
Major level: 112.50
The TLT closed at 113.96. 114.45 is minor resistance.
And if the TLT has two closes under 113.67, it should drop to 112.50.
114.06 should be minor resistance. A break under 113.67 and the TLT should head lower.
GLD:
Major level: 117.19
Minor level: 116.80
Minor level: 116.02 **
Major level: 115.63 <
Minor level: 114.85
Minor level: 113.28
Major level: 112.50
Minor level: 111.72
Minor level: 110.16
Major level: 109.38
The GLD closed at 115.92. Like the TLT, the GLD bounced off its oversold condition.
117.19 should be resistance. And 114.84 should offer support.
I would not expect this bounce to move higher than 118.75.
Two closes above 116.02 and the GLD should test 118.75. Look for resistance at 116.80.
XLE:
Major level: 78.13
Minor level: 77.35
Minor level: 75.78
Major level: 75.00 <
Minor level: 74.22
Minor level: 72.66 **
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
Major level: 68.75
The XLE closed at 72.17. The XLE is still holding the 71.88 support level. If this level cannot hold, it should head lower.
I don't see the XLE dropping lower than 70.31.
FXY:
Major level: 85.94 <<
Minor level: 85.75
Minor level: 85.36 ***
Major level: 85.16 <
Minor level: 84.97
Minor level: 84.58
Major level: 84.38
Minor level: 84.18
Minor level: 83.79
Major level: 83.59
The FXY closed at 85.19, back above the major 85.16 level.
84.96 should offer minor support. If the FXY can push above 85.16, it should offer support.
AAPL:
Major level: 231.25
Minor level: 229.69
Minor level: 226.56
Major level: 225.00
Minor level: 223.44
Minor level: 220.31 **
Major level: 218.75
Minor level: 217.19
Minor level: 214.06
Major level: 212.50
Apple closed at 216.02. Watch the minor 217.19 level today. If Apple closes under 217.19, it would drop to 212.
If it can regain 217.19, I would expect a move up to 225.
WATCH LIST:
Bullish Stocks: ESL, PEG, CHL, PYX, XOXO, NYT, VALE
Bearish Stocks: TSLA, FDX, BIDU, MMM, MLM, BABA, IBM, ITW, CB, SAGE, RCL, OLED, KLAC, ITW, KLAC
Be sure to check earnings release dates.