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
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
RRC Long at $11.85
Total Premium Collected $0.70
RIG Long at $8.81
Premium Collected - $0.81
RIG Short March 29th - $10.50 Call @ $0.35
FEYE Long at $17.18
Total Premium Collected $0.55
FEYE Short March 29th - $17.50 Call @ $0.25
FCX Long at $12.74
Total Premium Collected $0.48
FCX Short March 29th - $13 Call @ $0.24
AMC Long at $14.44
AMC Short March 22nd - $14.50 Call @ $0.43
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Yesterday, I suggested you sell the March 29th - $17.50 call on the FEYE position. This brings to 55 cents the total call premium collected on this position.
And I also suggested you sell the $13 call on FCX that expire on March 29th as well. Finally, I suggested you sell the $9.50 call on RIG that expires the same day.
So, at this point, you should one short call position for this Friday and three for next week.
Moving onto the markets.
The market actually stalled out yesterday, closing .37 points lower. It closed the day at 2,832.57. You may recognize that this was the second consecutive close above the upside confirming line of 2,832.03 which does suggest that the objective for the S & P 500 is now to 2,890.60.
But, it does not mean that the market will go straight up to the next level.
The VIX is beginning to show some signs of life. And with it sitting back on all-time historic lows, it does make me concerned that we may see a bounce in the VIX.
This, of course, would suggest that the market would pull back a bit. And this is one of the reasons I suggested selling all the call positions yesterday.
And no matter how the market trades in the short term, we get to keep the call premium we sold. Unfortunately, the option premium has not been like it was a few years ago, but we have to take what the market gives us and be satisfied with a slightly less return.
But with a second close above 2,832.03, it does suggest that if the market does pull back, support should come in at the major 2,812.50 level. If that level is violated, I would not expect the market to drop under 2,792.98.
In addition, the 30 minute chart has now crossed into an uptrend. This does bring the 30 minute chart into alignment with the 60 minute chart. With bullish trends on both these timeframes, buying against support is the best strategy.
The 2,790 area would be support from the 30 minute chart. And the market could drop to as low as 2,758 to find support on the 60 minute chart.
This afternoon at 2:00, we will get the FOMC interest rate decision, followed by a press conference. As you know, this is the type of event that can move markets.
The resistance level from yesterday's daily bar should be in the 2,836 to 2,839 area.
The support area from last week's weekly bar continues to be in the 2,785 to 2,794 area.
Pre open, the S & P 500 is trading relatively flat.
FDX reported last night and is trading about $12 lower in the pre market.
This afternoon, we will get earnings from NKE. And TIF reports before the open on the 22nd.
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 out at 13.63 yesterday. The low for the day was 12.37, or 13 cents under the major 12.50 objective we were looking for.
A bounce would not be a surprise here. Or should not be a surprise.
The question is will the VIX predict a change in trend? For a trend change to happen, the VIX needs to rally above 21.88.
And resistance still exists at higher levels until that can happen, namely at the 15.63 and 14.85 levels.
Short term charts remain bearish which implies that a rally will fizzle out.
SPX:
Major level: 2,890.60 <
Minor level: 2,871.08
Minor level: 2,832.03 **
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
Even with the modest lower close yesterday, the S & P 500 still managed to close above the 2,832.03 level. The objective should now be up to 2,890.60.
The major 2,812.50 level should now be support. And I would expect support at the minor 2,822.30 level.
The 30 minute chart has now crossed into an uptrend. This also implies the market should head higher.
QQQ:
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
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94
The QQQ closed at 179.05. The objective for the QQQ is still to 181.25. And yesterday's high came within 1.25 points of it.
176.56 should now be support. And 178.13 is a minor support level.
The 30 minute chart has moved into an uptrend. Technical support should be at 174. Buying against support is the best strategy at the moment.
The 181.25 level is a key level. If the QQQ can close above it for two days, it could run up to 200. Who says I don't make prediction?
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
Minor level: 148.44
The IWM closed at 154.96. Still struggling to clear the midband on the daily chart. Yesterday's high did clear it, but it could not close above it.
Of course, this is a key level to monitor. The midband is now 156.35.
Also, 156.5 is a key resistance level for the IWM. A failure should tell us a lot about where it should drop. And two closes above it, and it could signify a move much higher.
153.13 should be support. And minor support should be at 154.69.
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
Minor level: 118.36
Minor level: 117.58
The TLT closed at 121.41. The TLT is trying to close above the major 121.88 level. If it can't clear 121.88, I would expect a pullback should happen.
120.70 should be minor support.
The 30 minute chart has crossed into an uptrend. This does suggest further movement to the upside. 121 should offer technical support. And the 60 minute chart is close to moving into an uptrend. If it can cross up, it should signify that the TLT will move higher.
GLD:
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
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: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75
The GLD closed at 123.38. The objective now should be to the 125 level.
The 30 minute chart is still bearish. And technical resistance should be at 123.60. I would expect a selloff if the GLD rallies to the midband.
And there is a resistance level at 123.44. A close under this level and the GLD could drop to 120.
122.66 is minor support.
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 66.24. The XLE will still need two closes above 66.41 to suggest a move higher.
But, at this point, 65.63 should be support. If the XLE does break under 65.63, I would not expect a drop under 64.06.
The 30 minute chart just crossed into an uptrend. 65.30 should offer technical support.
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 85.61. With two closes above 85.36, the FXY should test 87.50.
30 minute chart remains bearish. Resistance is at 85.75. The FXY will need to clear 85.75 to head higher.
85.55 is minor support.
AAPL:
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
Predicted High: 188.76
Predicted Low: 184.30
Apple closed at 186.53. Apple is holding onto the midband which is 186.18. Watch this level.
Apple is a bit oversold in the short term. But, the 30 minute chart is strongly bullish, so buying after a pullback is the suggested strategy.
I would not expect Apple to drop below 181.25 on a pullback.
WATCH LIST:
Bullish Stocks: CMG, ROP, BDX, COST, ZBRA, SHOP, MCD, CLX, MCD, VRSK, KMB, MLNX, YUM. MSFT, PYPL, NKE, WPX, D, ETSY, CREE
Bearish Stocks: DPZ, FFIV, URI, STMP, LVS, FIZZ, SFLY, CBT, AN, STLD
Be sure to check earnings release dates.
