While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to 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
Premium collected - $1.25
NCR Long Jan 15 $27 Call
NCR Short Jan 15 $29 Call
Net Debit - $0.70
X Long at $14
Short September 25th $14 Call @ $.54
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Yesterday, all major indexes, with the exception of the NASD markets, were struggling to hold the bottom band on the daily charts.
The S & P 500 and the DOW are sitting right at their respective bottom bollinger bands.
The VIX is sitting right up against the top band.
And the market that everyone loves to hate, the XLE, is sitting right against the bottom band.
To me, these represent key inflection points where the market will either do one of two things.
Either close under the bottom (or the top band in the case of the (VIX) and continue in that direction.? Or reverse and the bottom band will act as support.
For the S & P 500, the odds favor a reversal.? This morning the market appears braced to open on the bullish side.
I do want to make a quick comment on a topic I mentioned a few days ago.? That is the oil pipelines.
A brokerage firm came out yesterday and questioned whether these companies could sustain their high dividend levels due to the falling price of oil.
As a result, a number of these companies fell hard yesterday.? KMI dropped just over 5%.? ETE was down 7.49% and ETP was down just over 6%.
I bring this up for two reasons.? The first is that the XLE is at a key inflection point and could be trying to form a bottom.
And the second is that this is precisely the time you want to look at assets that are completely out of favor.
Most of these stocks are completely oversold.? We know that by simply looking at their price in relationship to their extreme bollinger bands.? For the most part, they are all trading under the bottom band.
I would love to see these stocks drop more as it would create a better buying opportunity.
If you could pick up KMI under $20 per share, I feel it would be a major bargain.
Today is the last trading day of the quarter.? Expect some volatility.? And at noon today is our webinar.
I will see you then.
Here are the key levels for the markets.
Stocks...
?
VIX:?
Minor level - 32.81
Major level - 31.25
Minor level - 29.68
Minor level - 26.56 *
Major level - 25.00
Minor level - 23.44
Minor level - 20.31
Major level - 18.75
Minor level - 17.18
The VIX closed yesterday at 27.30 or above the 26.56 level.
It should try and move up to 31.25, however it appears that the top band, which is 27.95, is strong? resistance at this point.
A break under the top band could confirm the short term bottom.
S & P 500 Cash Index:?
Minor level - 1,945.32 *
Major level - 1,937.50
Minor level - 1,929.68
Minor level - 1,914.12
Major level - 1,906.30
Minor level - 1,898.48
Major level - 1,875.00
Yesterday's low was 3 points under the major 1,875 support level.
It is also the lower bollinger band on the daily chart.
That level is 1,884.13.
This should be strong support.
Nasd 100 (QQQ):?
Major level - 109.38
Minor level - 108.60
Minor level - 107.03
Major level - 106.25
Minor level - 105.46
Minor level - 103.91 *
Major level - 103.13
Minor level - 102.35
Major level - 100.00
Minor level - 99.21
Major level - 96.88
Major level - 93.75
The QQQ closed yesterday again closed under the 100 level.
It would need two closes under 99.21 to drop to 96.88.
TLT:?
Major level - 125
Minor level - 124.22
Minor level - 122.66
Major level - 121.88
Minor level - 121.09 *
Minor level - 119.53 *
Major level - 118.75
Minor level - 117.96
Major level - 115.63
The TLT is trying to move up to 125.?
Lower levels should act as support.
GLD:
Major level - 112.50
Minor level - 110.16 *
Major level - 109.38
Minor level - 108.60 *
Minor level - 107.03
Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13
The GLD should retest 106.25.
XLE:
Major level - 68.75
Minor level - 66.41 *
Major level - 65.63
Minor level - 64.84
Minor level - 63.28 *
Major level - 62.50
Minor level - 61.72
Major level - 59.38
Yesterday's low was 59.39 or one penny above the support line.
If XLE can rally to around 69 I would feel the bottom is in.? If not, it will consolidate for some time.
Apple:
Major levels for Apple are 118.75, 112.50, 106.25, 100, 93.75 and 87.50.
100 should be a major support level for Apple.?
Apple has moved into a downtrend on the daily chart and I would expect 117.50 level to act as resistance.?
After breaking under the 112.50 level, Apple drop about 3% yesterday.
106.25 should be the objective.
Watch list:
Bullish Stocks:? NKE, FL, ATO,? WX, FLO, NVDA
Bearish Stocks: ALXN, JAZZ, PVH, BIDU, FFIV, ZBH, MON, CAT, CMI, MMM, MWE, DD, APA, FDX
Be sure to check earnings release dates.