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
RRC Long at $11.85
Total Premium Collected $0.70
RRC Long at $9.20
RIG Long at $8.81
Premium Collected - $1.45
FEYE Long at $17.18
Total Premium Collected $0.80
DBX Long at $17.18
DBX Short Jan 31st-$17 call @ $0.70
X Long at $11.33
X Short Jan 10th - $11.50 call @ $0.35
NET Long at $17.09
NET Short Jan 17th - $17.50 call @ $0.55
FDX Long Jan 17th - $150 Put for $3.05
FDX Short Jan 17th - $145 Put for $1.37
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I did suggest three new positions yesterday. Two of them were short term covered calls and the third one was a short term bear debit spread.
In the alert for NET, I first referenced selling the January 17th - $17.50 call. The second time I mentioned the strike price, I inadvertently said it was the January 10th strike.
If you executed the alert, you know doubt realized it was the January 17th monthly call due to the fact that NET only has monthly options.
Today, of course, closes out the month of December, as well as the year of 2019.
As a reminder, the markets are closed tomorrow for New Years Day! I do want to wish you and your family a very Happy New Year!
Yesterday saw a pullback in the markets. This is not totally unexpected as the markets have been so overbought. The question now is how far can this pullback drop?
And the second question, which is the more important one, is simply if this is the start of a bear market?
As to addressing the first question, the short term charts are all bullish, so I don't expect a significant pullback.
For example, both the 30 and 60 minute charts for the S & P 500 are bullish.
The midband on the 30 minute chart is 3,173 and for the 60 minute chart is 3,144.
With the S & P 500 closing at 3,221.29, the market could drop another 48 to 77 points before a key support level is tested.
If those levels cannot hold, a drop to the lower band is possible. The lower band on the 60 minute chart is 3,020. So, you can see that this pullback could drop as much as 200 points without it affected the bull market.
With the market trading over 3,000, even a 5% pulback is a move of 150 points. 10% would be about a 300 point drop.
At this point, I do believe it is too premature to suggest a bear market is coming. But, as I have been saying, the sentiment indicators are all overbought, so a sell-off is not that unexpected.
But, at the very least, I would expect a close under the upper band on the monthly chart, which now reads 3,051. And as you can see, the market is still 170 points above that level.
Yesterday's range did expand. The daily range was 24.35 points as compared with the daily average true range of 18.28 points. The daily range was 133% of the average.
This was the first day in ten days where the daily range exceeded the average.
This is certainly a bearish sign. And along with the fact that the daily bar closed at 19% of the range, the odds favor yesterday's low of 3,221.29 being violated before the high of 3,216.57.
Resistance from yesterday's daily bar is in the 3,228 to 3,230 area.
The support area from last week's weekly price bar is in the 3,233 to 3,234 area, which is right around the daily support area.
Pre open, the S & P is trading about 6 points lower. Assuming this holds up to the open, the market should open under yesterday's low right at the open.
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 **
Minor level: 10.16
Major level: 9.38
The VIX closed Friday at 14.82. The VIX closed above 13.28 for a second day, so the objective should be to 15.63.
The VIX could move up to 18.75 with the uptrend still intact.
14.06 should be support. And technical support be around 13.77.
SPX:
Major level: 3,281.20 <
Minor level: 3,242.15 **
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
Minor level: 2,929.73
Minor level: 2,851.58
Major level: 2,812.50
Minor level: 2,773.45
The S & P closed at 3,221.29. With a close under 3,242.15, look for a move down to 3,125.
Major support should come in at 3,125. And watch the 3,203 level. It should offer minor support.
Technical support is around 3,210.
QQQ:
Major level: 215.65
Minor level: 214.87
Minor level: 213.30 **
Major level: 212.50 <<
Minor level: 211.74 **
Minor level: 210.17
Major level: 209.39
Minor level: 208.61
Minor level: 207.04
Major level: 206.25
Minor level: 205.48
Minor level: 203.91
Major level: 203.13
The QQQ closed at 212.21. Two closes under 211.74 and the QQQ should drop to 209.39.
212.50 should now be resistance.
The 211 should offer technical support.
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
Minor level: 145.31
Major level: 143.75
The IWM closed at 165.44. At this point, 167.19 should be resistance. And if the IWM closes under this level today, a drop to 162 should be the objective.
The minor 164.06 level should offer support. If the IWM cannot clear 167.19, it should continue down.
165 should be technical support.
Short term charts still remain bullish.
TLT:
Major level: 143.75
Minor level: 142.97
Minor level: 141.41
Major level: 140.63
Minor level: 139.85
Minor level: 138.28 ***
Major level: 137.50 HIT
Minor level: 135.84
Minor level: 132.81
Major level: 131.25
The TLT closed at 136.82. The TLT will still need two closes above 138.28 to move higher. Two closes under 135.84 and the TLT should continue down to 131.25.
Watch to see if 135.84 can hold. If it can't, it should head lower.
137.50 should be resistance. And technical resistance is at that level as well.
GLD:
Major level: 143.75
Minor level: 142.97
Minor level: 141.41 **
Major level: 140.63
Minor level: 139.85
Minor level: 138.28
Major level: 137.50
Minor level: 136.72
Minor level: 135.16
Major level: 134.38
The GLD closed at 142.63. The objective for the GLD should be up to 143.75.
140.63 should be support.
137.50 should be strong support. So if the GLD does break under it, I would expect it to head lower.
The key level is 134.38 on the downside. If the GLD has two closes under this level, it could drop to 125.
Technical resistance is around 140. Short term, the GLD is overbought.
XLE:
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
Minor level: 55.86
Minor level: 55.08
Major level: 54.69
The XLE closed at 59.70. At this point, the XLE would have to regain 61.72. If it can't, a drop to 59.38 would be expected.
With the XLE above the midband, which is now 58.84, this level should be support.
The XLE still has not crossed into an uptrend on the daily chart, but it is inching closer. If the XLE can cross into an uptrend and start to move above the midband, it could have a strong move higher.
AAPL:
Major level: 300.00 <
Minor level: 296.88
Minor level: 290.63 **
Major level: 287.50 HIT
Minor level: 284.38
Minor level: 278.13
Major level: 275.00
Minor level: 271.88
Minor level: 265.63
Major level: 262.50
Apple closed at 291.52. Apple did clear 290.63 Friday, but could not close above it. A close above 290.63 today and Apple should head up to 300.
287.50 should offer support. And minor support is at 290.63.
And Apple is up against the upper band on the daily chart. That level is 295.02.
Needless to say that short term trends remain bullish.
WATCH LIST:
Bullish Stocks: TSLA, GOOGL, SHOP< HUM, NOC, ADBE, SPY, DPZ, BDX, INTU, NVDA, BABA, FB, MCD, KLAC, URI, ZBH, JPM, IBM, RCL
Bearish Stocks: BA, FFIV, CHKP, ALXN, SAGE, SQ, PLCE, TXRH, CAKE
Be sure to check earnings release dates.