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Monday the S & P 500 sold off 14.46 points, to close at 2,975.95. The low for the day ended up at 2,970.09, before rallying back to close about 5 points above the low.
Yesterday was the second consecutive day where the market opened with a bearish gap.
But, based on Friday's daily bar, we expected weakness at the beginning of the week. And then I am looking for support, the weekly support level.
And yesterday, the S & P 500 managed to close just above the lower weekly support level of 2,973.53. This is also just above the major resistance level, which is 2,968.80.
The 2,968.80 level should still offer support.
With the recent movements in the S & P 500, the resistance levels have expanded, as you know.
The downside level is now at 2,929.73, which is about 46 points from the current market price.
With the widening volatility, this tells us that the S & P 500 could drop almost another 50 points and this would be considered a normal pullback.
When we get into a situation like this, the short term charts can be helpful.
And scoping down to the 30 and 60 minute charts, we see that both are still bullish. So, we do expect support to come in and the market to bounce after that.
The question is at what price level would this happen?
The midband on the 60 minute chart is 2,881.65 and on the 30 minute chart, it is 2,929.35.
The 60 minute midband is almost 100 points below where the market is trading now. And the 30 minute midband is about 50 points under the market.
The midband should offer support the first time they are tested.
But, I bring this up to show you how far the market could drop and it really can not be considered a move out of the ordinary.
The resistance level from yesterday's daily price bar is in the 2,975 area, which is around the close.
Pre open, the S & P 500 is set to open with another bearish gap. It is trading about 11 points lower as I write this.
Earnings should begin next week. The biggest event this week should be the release of the FOMC Minutes at 2:00 EST on Wednesday.
Pre open the S & P 500 is trading about 6 points lower.
Here are the Key Levels for the Markets:
$VIX:
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 <
Minor level: 11.72
The VIX closed at 13.96 yesterday. The VIX got as high as 14.44 before pulling back to close under 14.95.
At this point, a close under 14.85 today and the VIX should drop to 12.50.
14.06 continues to offer resistance. And 12.50 should offer support.
SPX:
Minor level: 3,164.08
Major level: 3,125.00
Minor level: 3,085.95
Minor level: 3,007.85 ***
Major level: 2,968.80 << HIT
Minor level: 2,929.73
Minor level: 2,851.58
Major level: 2,812.50
Minor level: 2,773.45
Minor level: 2,695.35
Major level: 2,656.30
Support should still be at 2,949.20. I would expect strong support at this level if it is tested. It is looking more likely that it will.
And if the S & P 500 can clear 2,998, it should head higher. This is a short term resistance level.
The next minor level on the upside is 3,007.85. But, the market will need to clear 2,998 first.
Trend still remain firmly bullish.
QQQ:
Major level: 193.75
Minor level: 192.19
Minor level: 189.06 **
Major level: 187.50 < Hit
Minor level: 185.94 **
Minor level: 182.81
Major level: 181.25 <
Minor level: 179.69
Minor level: 176.56
Major level: 175.00
The QQQ closed at 189.71. The QQQ is still within 3 points of the 193.75 objective. But, at this point, it may test 187.50 first.
188.28 should offer minor support. And minor resistance is at 192.19.
Technical support is at 188. Short term charts remain firmly bullish.
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 155.19. The IWM closed lower, but managed to close above the midband, which is now 154.44.
154.69 should offer minor support. But, if the IWM does break under this level, it could drop to 150.
To move higher, the IWM will need two closes above 157.81.
Short term trends remain bullish. So, buying against support is the best strategy.
Technical support is at 153.50.
TLT:
Major level: 134.38
Minor level: 133.60
Minor level: 132.03 **
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
The TLT closed out at 132.61. It is under the upper band, which is now 134.39. It may retest the upper band again.
Beginning to look like it is failing at the upper band.
The TLT should be volatile this week with the Fed meeting tomorrow.
134.38 should be a resistance level. So, if the TLT does clear it, expect it to head higher.
132.42 is minor support. A break under it and the TLT should drop to 131.
GLD:
Major level: 134.48
Minor level: 133.60 **
Minor level: 132.03
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
The GLD closed at 131.29. It now closed under the upper band, which is 132.60.
A break under 131.25 and the GLD could drop to 125.
134.38 is a resistance level and the GLD cannot clear this level, I would expect a pullback.
XLE:
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
Minor level: 58.60
Minor level: 57.03
Major level: 56.25
The XLE closed at 63.18. It will need two closes above 63.28 to move higher.
62.50 should be support. And minor support is at 62.89.
64.06 is a minor resistance level. The XLE is sitting right on a technical support level, which is 63.
Short term charts remain bullish.
AAPL:
Major level: 212.50
Minor level: 209.38
Minor level: 203.13 **
Major level: 200.00 <
Minor level: 196.88
Minor level: 190.63
Major level: 187.50
Minor level: 184.38
Minor level: 178.13
Major level: 175.00
Apple closed at 204.23. 200 should now offer support.
The next level on the upside is 203.13. If the Apple can move above this level, it should head higher. The objective should be to 212.50.
Short term charts remain bullish.
WATCH LIST:
Bullish Stocks: NFLX, LMT, ADBE, FLT, MA, COST, APD, MLM, VRSN, MCD, HD, FB, OLED, HON, V, BABA, DIS, MSFT, WYNN
Bearish Stocks: RTN, USNA, SPR, KEX, NUS, DIS, TUP
Be sure to check earnings release dates.