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.
CURRENT POSITIONS:
GOGO Long at $19.93
Total Premium Collected $1.95
ASNALong 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
RRC Long at $11.85
Total Premium Collected $0.70
RIG Long at $8.81
RIG Short Feb 15th - $9 Call @ $0.26
NLS Long at $7.66
VALE Long at $11.85
VALE Short Feb 22nd - $12 Call @ $.30
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Yesterday, I suggested a weekly covered call on VALE. The suggestion was to buy the stock and sell the $12 call that expires next Friday.
The market had a strong push yesterday. For the day, it closed up 34.93 points.
It closed at 2,744.73.
And as I have been discussing, I was expecting a retest of the midband.
And yesterday broke above it and closed above it. That level is now 2,731.41.
So, the S & P 500 managed to close above the midband by about 13 points. But, as I have been saying, I have been biased for the S & P 500 to clear this level and now it has.
By the way, there were two reasons why I felt the market would clear the midband.
The first is that the VIX has already broken under its midband.
And the second was that the DOW had cleared the midband.
It is not always true that the S & P 500 will follow suit, but in my experience, it typically does.
But, the point I have been making or at least I have tried to is that it is not necessary to have a predisposition as to what the market will do at the midband.
You simply react to what the market action is.
The other point I had made was that when the price dropped under the lower band like the S & P 500 did, the target is usually back to the midband.
Now that the market has performed as I described, you may believe this pattern works. But when the S & P 500 was about 400 points lower back in December, I know it is difficult to fathom that it could rally that much.
Yesterday ended up closing at 86% of the daily bar. This puts the odds of taking out yesterday's high well above a violation of the low.
I mentioned the narrow range doji bar from Monday and how you want to monitor the high and the low. You also want to monitor the close.
But, typically, the price will continue in the direction of the violation after a doji bar.
And yesterday, the S & P 500 gapped 12.81 higher at the open. That is measured from Monday's close to Tuesday's open.
If you measure it from Monday's high, the open was 4.56 points above the prior day high.
So, the market had already violated Monday's high at the open. And continued to trade to the upside all day.
Pre open, the S & P 500 is trading about 7 points higher. Support from yesterday's daily bar is in the 2,733 to 2,735 area.
I also want to mention that the S & P 500 took out last week's high which was 2,738.98. This should indicate that that price should offer support on a pullback. And last week's close of 2,707.88 should also be support in the event of a deeper pullback.
Earnings do continue this week. One of the most closely watched companies will be NVDA, which reports Thursday after the close.
BIDU also reports Thursday.
Here are the Key Levels for the Markets:
$VIX:
Minor level: 22.66
Major level: 21.88
Minor level: 21.10
Minor level: 19.53
Major level: 18.75
Minor level: 17.97
Minor level: 16.41
Major level: 15.63 <
Minor level: 14.85
Minor level: 13.28
Major level: 12.50
The VIX closed at 15.43. Yesterday's high was 15.65 which was 2 cents above the 15.63 resistance level we identified.
15.63 should continue to act as support.
And 15.23 is a minor level on the downside. If the VIX breaks under 15.23, I would expect a drop to 14.45.
SPX:
Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93
Major level: 2,734.40 <
Minor level: 2,714.88 **
Minor level: 2,675.83
Major level: 2,656.30
Minor level: 2,636.75
Minor level: 2,597.65
Major level: 2,578.10
The S & P 500 closed just above the minor 2,744.10 level. This level should act as support.
If the market pulls back deeper, support should be at 2,695.30.
2,718 should be technical support.
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
Minor level: 154.69
The QQQ closed at 170.89 yesterday. A close today above 170.31 confirms again the objective of 175.
Like the S & P 500, the QQQ closed above its midband on the daily chart. That price level is now 169.37.
171.88 is minor resistance. A break above it and the QQQ should continue higher.
168.75 should be support.
IWM:
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
Minor level: 142.19
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81
The IWM closed at 152.99. A close today above 151.56 and the IWM should test 156.25.
The IWM is inching closer to the midband which is 155.99.
150 should be strong support.
TLT:
Major level: 123.44
Minor level: 123.05
Minor level: 122.27 **
Major level: 121.88 <
Minor level: 121.49 **
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
Minor level: 118.14
Major level: 118.75
The TLT closed at 121.56. At this point, I would expect support at the minor 121.49 level.
So, if the TLT breaks under 121.49, look for it to move lower.
Technical support is right around where the TLT closed. Still biased for a move higher because short term charts are still bullish.
GLD:
Major level: 125.00
Minor level: 124.22 **
Minor level: 122.66
Major level: 121.88 <
Minor level: 121.10
Minor level: 119.53
Major level: 118.75
Minor level: 117.97
Minor level: 116.41
Major level: 115.63
The GLD closed at 123.86. Look for resistance at 124.22.
122.66 is still minor support on the downside. And 125.78 is resistance on the upside.
XLE:
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
Minor level: 61.72
Minor level: 60.16
Major level: 59.38
The XLE closed at 64.04. Yesterday was the first close above 63.28. A close today above 63.28 and the XLE should head up to 65.63.
63.67 should offer support. Technical support is around 63.
FXY:
Major level: 89.84
Minor level: 89.65
Minor level: 89.26
Major level: 89.06
Minor level: 88.87
Minor level: 88.48 **
Major level: 88.28
Major level: 87.50 <
Major level: 86.72
Major level: 85.94
Minor level: 85.75
Minor level: 85.36
Major level: 85.16
Minor level: 84.97
The FXY closed at 86.38. The FXY finally broke under the midband which is 86.78.
This level should now be resistance.
If the FXY breaks under 86.33, look for it to head lower.
Short term charts remain bearish.
AAPL:
Major level: 187.50
Minor level: 184.38
Minor level: 178.13
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: 159.38
Minor level: 153.13
Major level: 150.00
Apple closed yesterday at 170.89. A close today 170.31 would suggest a move up to 175.
168.75 should be strong support.
Biased for a move up.
WATCH LIST:
Bullish Stocks: CMG, AVGO, WDAY, ZBRA, VRSN, EW, ADP, ADSK, DECK, V, EXPE, VRSK, DG, CHKP, AXP, IRBT
Bearish Stocks: TTWO, ABBV, SNE, BABY, ERJ
Be sure to check earnings release dates.
