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
ET Long at $7.50
Premium Collected $0.60
MFA Long at $4.20
Premium Collected $0.95
BOX Long at $17.65
Premium Collected $1.05
GILD Long Dec 11th - $60 Call @ $2.20
GILD Short Dec 11th - $65 Call @ $.33
PS Long at $16.84
PS Short Dec 18th - $17.50 Call @ $.55
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Yesterday, I suggested selling the December 18th-$18 call against the BOX long stock position. This brings to $1.30 per share of premium collected. If these calls are assigned next Friday, the return will be 9.3% for the holding period.
The S & P 500 sold off on the news of the FTC suing Facebook. For the day, the S & P 500 closed 29.43 points lower.
The day closed out at 3,672.82. And the day closed out at only 24% of the range for the day. This does suggest we should see some follow through to the downside today.
And the range for the day was 51.85 points. This was the first day that exceeded the daily average true range, which is now 43.77 points, in 21 days. The range worked out to 118% of the average range.
I have a few comments about yesterday.
The first is that I mentioned that the daily average true range was reducing daily. In fact, I wrote this just yesterday ... "This decreasing of the average range usually is a warning that a top is forming. At least it puts us on alert."
The question now is will this be the beginning of a multi-day pullback? Our resistance levels and the VIX should help to determine that.
The second comment is about the daily close percentage.
I mentioned that Tuesday's daily bar closed at 79% of the range of the daily and that put the odds in favor of the high being violated before the low.
And it did work out. Yesterday's high of 3,712.39 did take out Tuesday's high of 3,708.45 by about 4 points. So, this simple projection worked out again.
Remember, this projection is about the odds of the prior day high or low being violated. It does not mean the daily bar should close higher or lower.
The question for us simple. Could we have predicted this move yesterday?
Almost to the penny, the S & P 500 made a three-level move off the last major pivot low, which was 3,233.94.
In fact, I did mention this yesterday as well. I wrote this: "But, by clearing 3,701.94, the S & P has now completed a three-level move off the last major bottom, which was 3,233.94."
A three-level move confirms that the market is still bullish. So, this sets up scenarios as to how far a pullback could go.
But, one other factor to consider is this.
After taking out the last major objective, which was 3,593.60, the market has confirmed a move up to the next major level, which is 3,749.80. But, it does have to clear the minor 3,710.75 level to do that.
And as it turned out, the high for the day yesterday was 3,712.39, or 1.64 points above it before reversing.
The market will often reverse off a minor level after clearing a major level. And that is where the market reversed yesterday.
Pre open, the S & P is trading about 5 points lower.
This projects to an open around 3,668 or about 7 points above yesterday's low of 3,660.54.
The resistance level from yesterday's daily bar is in the 3,686 area.
ADBE reported and is trading about $3 lower. RH also reported and is relatively flat.
This afternoon we hear from COST, AVGO, and ORCL.
Here are the Key Levels for the Markets:
$VIX:
Major level: 31.25
Minor level: 30.47
Minor level: 28.91
Major level: 28.13
Minor level: 27.35
Minor level: 25.78
Major level: 25.00
Minor level: 24.22
Minor level: 22.66 **
Major level: 21.88 <
Minor level: 21.10 **
Minor level: 19.53
Major level: 18.75
The VIX closed at 22.27. The VIX closed 1.59 points higher. Yesterday's high went to 22.93 before dropping to close under the minor 22.66 level.
The VIX will need two closes above 22.66 to move up to 25. So, watch this level today.
A break under 21.88 and the VIX should drop to 18.75.
The VIX is overbought in the short term. Watch the 22.50 area for resistance.
Remember, as the VIX drops, the market should head higher.
S & P 500:
Major level: 3,749.80 <
Minor level: 3,710.75
Minor level: 3,632.65 **
Major level: 3,593.60 <
Minor level: 3,554.55
Minor level: 3,476.45
Major level: 3,437.40
Minor level: 3,398.35
Minor level: 3,320.25
Major level: 3,281.20
Minor level: 3,242.15
Minor level: 3,164.00
Major level: 3,125.00
The S & P closed at 3,672.82. The S & P closed 29.43 points lower.
Support should still be at the 3,632.65 level. Watch the minor 3,671 level. This level should be support. And if the market can hold, 3,671 it should bounce.
The 3,646 area should provide technical support.
QQQ:
Major level: 312.50
Minor level: 310.94
Minor level: 307.81
Major level: 306.25
Minor level: 304.69
Minor level: 301.56 **
Major level: 300.00
Minor level: 298.44
Minor level: 295.31
Major level: 293.75
Minor level: 292.19
Minor level: 289.06
Major level: 287.50
Minor level: 285.94
The QQQ closed at 301.31. The QQQ closed 6.98 lower.
At this point, the QQQ will need to reclaim 301.56 to move higher. And watch the 300 level for support.
To continue lower, the QQQ will need to close under 298.44.
Short term, the QQQ is oversold. Technical support is around 300.
IWM:
Major level: 193.75
Minor level: 192.19
Minor level: 189.06 **
Major level: 187.50 HIT
Minor level: 181.25
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 IWM closed at 189.41. The IWM closed 1.39 lower on the day.
The IWM had its second close above 189.06. The objective for the IWM should be up to 193.75.
And it would suggest that support should be at the 187.50 level.
187 should be technical support.
TLT:
Minor level: 166.41
Major level: 165.63
Minor level: 164.85
Minor level: 163.28
Major level: 162.50
Minor level: 161.72
Minor level: 160.16
Major level: 159.38
Minor level: 158.60
Minor level: 157.03
Major level: 156.25 Hit
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
The TLT closed at 156.82. It closed .52 lower. The TLT still needs two close above the 157.03 level to move higher.
Watch the 156.25 level. A break under this level and the TLT should head lower.
The TLT is still under the midband on the 60 minute chart. This level, which is now 158.33 and should be resistance. Watch this level on a bounce.
Still looking for a test the midband on the 60 minute chart.
GLD:
Minor level: 182.03
Major level: 181.25
Minor level: 180.47
Minor level: 178.91
Major level: 175.00
Minor level: 174.25
Minor level: 172.70 **
Major level: 171.88
Minor level: 171.10
Minor level: 169.53
Major level: 168.75
Minor level: 167.97
The GLD closed at 172.50. The GLD closed 3.00 lower on the day. The GLD closed above the major 175 level.
Watch the 171.88 level today. A break under this level and the GLD should head lower.
The GLD is right at the midband on its 60 minute chart. That price level is 175.60.
This level should be resistance.
And watch the 174 area for technical resistance as well.
XLE:
Major level: 43.75
Minor level: 42.95
Minor level: 41.40
Major level: 40.63 < HIT
Minor level: 39.83
Minor level: 38.28
Major level: 37.50
Minor level: 36.72
Minor level: 35.15
Major level: 34.37
Minor level: 33.59
Minor level: 32.03
Major level: 31.25
The XLE closed at 40.36. The XLE closed .09 higher on the day. But, it is still above the midband on the daily chart, which is 38.65. This level should be support now. And it it holds, expect more movement to the upside.
And break under it, and the XLE should head lower.
The next minor level is 41.40. Two closes above this level and the XLE should head up to 43.75.
The XLE needs to take out 40.63 to head higher.
AAPL:
Minor level: 140.63
Major level: 137.50
Minor level: 134.38
Minor level: 128.13
Major level: 125.00 <
Minor level: 121.88 **
Minor level: 115.63
Major level: 112.50
Minor level: 109.13
Minor level: 103.13
Major level: 100.00
Apple closed at 121.78. Apple closed $2.60 lower.
Target now should still be up to the 125 level. And Apple came to within 2 cents of the target.
With a close today under 121.88, Apple should drop to 112.50.
The 120.00 area should provide technical support.
WATCH LIST:
Bullish Stocks: TTD, GOOGL, TSLA, LRCX, RH, ASML, IDXX, MSCI, AVGO, RNG, MSTR, SPOT, PANW, FDX, MLM, KLAC, TEAM, GS, HON, CAT, ZS
Bearish Stocks: AMT, PNW, ED, K, EVRG, EQC