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 $1.06
ET Long at $11.78
Premium Collected $0.35
DBX Long at $19.70
Premium Collected $0.75
ET Long at $7.50
Premium Collected $0.60
AGNC Long at $13.19
Premium Collected $1.20
AGNC Short April 3rd - $13.50 call @ $0.80
MFA Long at $4.20
MFA Short April $5 Call @ $0.40
FCX Long at $6.93
Premium Collected $.68
FCX Short April 17th - $7.50 Call @ $0.33
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Yesterday, I suggested you sell the April 17th - $7.50 call against the FCX position. This brings to $0.68 per share the amount of call premium collected on this position.
The S & P 500 had the bounce we had been looking for. Quite frankly, the bounce was much stronger than I would have expected. But, this seems to be the norm for this market infected with the flu.
Why do I say we were looking for a bounce?
Well, you know the key that I have been writing about were two facts. The first is that the S & P would reclaim the lower band on the daily chart and the VIX would drop under the upper band.
And both events happened.
Before yesterday's rally, the S & P spent the prior three days trading right at the lower band on its daily chart.
And the VIX on the second finally closed under the upper band.
And as pointed out, the bullish percent index had the lowest reading I have ever seen. It managed to go from 1.4% to 76% in about two weeks.
Just as this index dropped like a rocket during the sell-off, it climbed just as fast.
For the day, the S & P 500 ended up closing 175.03 points higher. It was up 7.03% on the day.
And the DOW actually managed to close above the lower band on its daily chart.
This means that the only major market not trading above its lower band is the IWM.
After the close yesterday, I was wondering if we would get some follow-through today.
And it does seem that way with the S & P trading about 80 points as I write this.
The fact that the S & P held the lower band now suggests we should see a test of the midband, which is 2,989.37.
And yesterday closed at 2,663.68 or about 300 points below that level.
If you add in a projected open about 80 points, that objective is only about 240 points away.
And with a daily average true range of 135 points, the midband could be tested in three days, if my math is correct.
But, I do expect a retest of the lower band at some point and a reversal around the midband would be an opportunity to position ourselves for that trade.
There are two other levels I am watching on this rally. They are the 61.8% retracement levels of the downswings.
The 61.8% level of the entire downswing measures 2,934, which is very close to the midband.
And 2,776 is the 61.8% level of the last swing.
Both these levels are areas to watch for possible selling pressure.
For this week, I am looking at the long-range candle from two weeks ago to be replicated.
Assuming it is, it projects to a high this week of around 3,019, which is also around the midband.
Keep an eye on the price levels I have outlined today.
Here are the Key Levels for the Markets:
$VIX:
Major level: 40.62
Minor level: 39.84 **
Minor level: 38.28
Major level: 37.50
Minor level: 36.72
Minor level: 35.16
Major level: 34.38
Minor level: 33.60
Minor level: 32.03
The VIX closed at 45.24. The VIX closed 1.56 points lower. This was the third consecutive day that the VIX closed under the upper band. The upper band is 54.78.
The divergence with the S & P from Friday once again pointed the way to a rally.
Support for the VIX should be around 43. And resistance is at 51.
S & P 500:
Minor level: 3,007.85
Major level: 2,968.80
Minor level: 2,929.75
Minor level: 2,851.65
Major level: 2,812.50
Minor level: 2,773.45
Minor level: 2,695.35
Major level: 2,656.30 <
Minor level: 2,617.25
Minor level: 2,539.06
Major level: 2,500.00
Minor level: 2,460.95
Minor level: 2,382.85
Major level: 2,304.75
Minor level: 2,226.65
The S & P closed at 2,662.68. The market managed to close above the major 2,656.30 level.
The next level on the upside is 2,695.35. If the S & P can hold this level, look for a push to 2,812.50.
There is short term resistance at 2,805. Clearing this level would be very bullish.
Support should be at the major 2,500 level.
QQQ:
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
The QQQ closed at 196.48. The QQQ is actually back to the midband on its daily chart and managed to closed just above it. The midband is 195.39.
This level should now be support.
Minor resistance is right around 200 and with a projected open above it, it should become support.
IWM:
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
Minor level: 151.56 **
Major level: 150.00 <
Minor level: 148.44 **
Minor level: 145.31
Major level: 143.75
The IWM closed at 112.63.
Still trading below the lower band on the daily chart, which is now 115.95.
With all other major markets above their lower bands, I would expect the IWM to follow. So, watch the lower band today.
Support should be around 108. And technical resistance at 130.
TLT:
Major level: 156.25
Minor level: 155.48
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
Minor level: 150.78
Major level: 150.00
Minor level: 149.22
Minor level: 147.66
Major level: 146.88
Minor level: 146.10
The TLT closed at 168.06. The TLT closed above the upper band on the daily chart, which is 165.96.
Support should still be at the upper band. And the TLT will not drop until it closed back inside the upper band.
Watch the upper band for support. And watch this level again today.
Resistance should be around 172. And support at 167.
GLD:
Major level: 159.38
Minor level: 158.60
Minor level: 157.03
Major level: 156.25 <
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
Minor level: 150.78
Major level: 150.00
Minor level: 149.22
Minor level: 147.67
Major level: 146.89
Minor level: 146.11
The GLD closed at 156.88. Target of 155.47 hit. If it can't, it should head lower.
The 158 area should now be resistance. And 151 should be support.
XLE:
Major level: 56.25
Minor level: 55.47
Minor level: 53.90
Major level: 53.12
Minor level: 52.34
Minor level: 50.78
Major level: 50.00
Minor level: 49.22
Minor level: 47.65
Major level: 46.88
Minor level: 46.09 **
Minor level: 44.53
Major level: 43.75
The XLE closed at 31.41. Still about $2 under the lower band. The lower band on the daily chart is now 32.60.
The lower band is resistance until the XLE can close above it.
The 29 area should now be technical support. And resistance is at 37.
AAPL:
Major level: 325.00
Minor level: 321.88
Minor level: 315.63
Major level: 312.50
Minor level: 309.38
Minor level: 303.13
Major level: 300.00
Minor level: 296.88 **
Minor level: 290.63
Major level: 287.50 <
Minor level: 284.38
Minor level: 278.13
Major level: 275.0 0
Minor level: 271.88
Apple closed at 262.47. Apple is still in an uptrend on its daily chart. Apple closed $21.06 higher.
It held the midband and moved higher. This level should now be support, which is 238.
The 261 area should be technical support. Resistance is at 272.
WATCH LIST:
Bullish Stocks: TLT, REGN, WMT, TTWO, GILD, PDD, MRNA, OMI
Bearish Stocks: AZO, MELI, ORLY, ANTM, FLT, CTAS, ALGN, ECL, LH, WHR, WCN, DGX, DLTR, CRI, WPC, OMC
