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
MDR Long @ $9.31
FB - Long Feb $135 Call @ $10.60
FB - Short Feb $145 Call @ $5.90
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With a bounce in the market yesterday, I suggested a longer-term debit spread on FB. The trade is based on an anticipated bounce in an oversold stock. And by going out to February of next year, we have enough time to see if the stock gets the bounce I expect.
For the day, the S & P 500 closed 40.09 points higher. The market closed at 2,673.45.
The intra day range was only 24.38. This was because of the bullish gap open.
If you measure the close to close relationship, the range was 40.89 points.
The average true range is now 44.55 points, so the range was almost the daily average.
As I have stated before, the bullish bounce in down markets tend to be sharp and that is what we had yesterday.
The S & P 500 was up 1.55% yesterday. The NASD was up even more. The composite was up 2.06% and the QQQ was up 2.31%. The DOW up the smallest of all the major markets, up only 1.46% for the day.
The question at the moment is this?
Can this be the end of the pullback? And if it isn't, how far can the bounce go?
As far as this being the end of this pullback, one major positive for the market is that the S & P 500 reclaimed the major 2,646.50 level.
Had the S & P 500 closed under that level yesterday, it would have suggested that the market would head lower.
Now that 2,646.50 is reclaimed, the S & P 500 would still need two closes under it to head lower.
And yesterday, the S & P 500 closed above the next minor level which is 2,658.70. This now suggests that if the S & P 500 can close above 2,658.70 today, it should test 2,695.30.
As far as high this bounce can go, we can follow the confirming levels to the upside to help us determine that.
The next major level after 2,695.30, is 2,744.10.
I bring this up because the midband on the daily chart is very close to this level. The midband is 2,750.94.
As you know, that is now a level of resistance.
And a move up to 2,744.10 would be a two-level move higher. In downtrending markets, the bullish moves usually do not move more than two levels.
So, getting above the midband would be a sign of strength. And clearing two levels would also show strength.
As for today, we know that yesterday's close percentage was 96%. This puts the odds of violating yesterday's high before the low at over 90%.
And support from yesterday's daily bar is in the 2,662 area.
Pre open, the S & P 500 is trading about 11 points lower. This projects to an open at around 2,662 which is right at the support level from yesterday. Watch to see if the S & P 500 can hold this level.
Earnings do continue this week. This afternoon, we will hear from CRM. And Thursday after the close, we get WDAY and PANW.
Continue to monitor the levels as I mentioned.
Here are the Key Levels for the Markets:
$VIX:
Major level: 31.25
Minor level: 29.69
Minor level: 26.56
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
The VIX closed at 18.90. The VIX collapsed and dropped 12.17%.
18.75 should offer support. But to move lower, the VIX will need to close under 17.19.
On the upside, 20.31 should be resistance. Along with 22.66.
SPX:
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 <
Minor level: 2,683.10
Minor level: 2,658.70 **
Major level: 2,646.50 <
Minor level: 2,634.30
Minor level: 2,609.90
Major level: 2,597.70
The S & P 500 recouped the major 2,646.50 level. It will now need two closes under 2.646.50 to confirm a drop to 2,500.
2,651 should offer minor support.
To move higher, the S & P 500 will need two closes above 2,658.70. Now that the market cleared this level, it should offer support.
2,700.20 should be minor resistance.
QQQ:
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
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 <
The QQQ closed at 162.89. The QQQ cleared the major 162.50 level. This now implies that 160.94 should offer support.
Minor support should be at 160.94. 164.06 should be resistance.
IWM:
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 <
Minor level: 148.44 **
Minor level: 145.31
Major level: 143.75
The IWM closed at 149.81. Yesterday's high hit the major 150 level.
150.78 should be resistance. And 149.22 is minor support.
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
Minor level: 112.11
Minor level: 111.33
Major level: 110.94
The TLT closed at 114.88. After hitting the 115.63, the TLT has now pulled back.
114.06 should be support and most likely objective for the TLT.
Short term charts remain bullish, implying the TLT should find support and make another run.
114.45 should offer short term support. And 116.41 is resistance.
GLD:
Major level: 118.75
Minor level: 117.97
Minor level: 116.41
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 115.64. The GLD is holding just above the major 115.63 level. If it can hold this level, look for a continued bounce.
The midband should now be support.
115.23 is minor support. 116.41 is minor resistance.
Short term charts are bearish.
XLE:
Minor level: 72.66
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
Major level: 68.75
Minor level: 67.97
Minor level: 66.41 **
Major level: 65.63 <
Minor level: 64.85 **
Minor level: 63.28
Major level: 62.50
The XLE closed at 64.87. It recouped 64.85, so the XLE will still need two closes under it to drop to 62.50.
65.63 is minor resistance. And minor support is at 64.45.
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 84.11. The FXY broke, and now if it closes under 84.18 today, it should drop to 83.59.
As I said, the recent upmove has been a bounce in a bear market.
83.98 should be minor support and 84.38 is minor resistance.
AAPL:
Minor level: 204.69
Minor level: 201.56
Major level: 200.00 <
Minor level: 198.44 **
Minor level: 195.31
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
Apple closed at 174.62. It was up $2.33 on the day. I would like to see a few days where Apple consolidates down around these levels.
If this does happen, I would expect a bounce. Apple is oversold. Be patient and wait for the entry.
At the very least, I would want Apple to reclaim the 175 level.
168.75 should offer support. And 176.56 is minor resistance.
WATCH LIST:
Bullish Stocks: CLX, UHS, LLY, KMB, UAL, DUK, OMCL, BKH, DAL, FL
Bearish Stocks: BKNG, GOOGL, BA, DIA, GS, FLT, BIDU, NVDA, FB, RACE, OLED, EA, SWKS, WLK, GILD
Be sure to check earnings release dates.