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
Total Premium collected - $1.95
NCR Long Jan 16 $27 Call
Net Debit - $.80
X Long at $14
Total Premium collected - $.89
ASNA Long at $14.20
Total Premium collected - $.75
ETE Long $14.05
Total Premium collected - $1.05
Short Jan 8th-$13.75 Call
P Long $13.38
Short Jan $14 Call - $.35
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Both short call positions expired last Friday and profits on those positions have been booked.
I will be looking to put them back on this week.
As for the markets,? last week turned out to be one of the worst in quite a long time.? The S & P 500 ended the week down close to 6% and the DOW dropped 6.19%.?
The NASD Composite was the biggest loser, dropping 7.26%.
This sell off is being blamed on the trouble out of China. If you recall, back in August I wrote a piece on the state of the markets and I mentioned that China could be the culprit for our markets shifting into a bear market.
You can find that report in the members area if you did not read it.
I do want to mention that the December Buy Back report is posted in the members area.?
Back to the markets.
As I mentioned last week, the downside objective for the S & P 500 should be to 1,906 or possibly to 1,875.
Friday's low was 1,918.46, so the S & P is within 12 points of the first objective.
The second objective, 1,875 would mean a retest of the lows made back in August.
Having said that, I would expect a bounce in the markets from these levels, which would set up an opportunity to short the markets for the retest.
I say this because all markets are trading well under their extreme lower bollinger bands on their 60 minute charts.
In fact, I really do not remember a situation like this in a long time.
For example, the lower band on the 60 minute for the S & P 500 is 1,953.98 and Friday's close was 1,922.03.? This is over 30 points from the lower band.
This sets up a scenario that the lower band should be retested once the market trades back inside of them.
The other technical factor at the moment is that the markets have not had a selling climax during this sell off.
This tells me to expect lower lows.
Today starts the beginning of earnings season with Alcoa reporting after the close today.
Perhaps some positive earnings reports will help to turn the markets.
Here are the key levels for the markets.
?
VIX:?
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 - 18.85
Minor level - 17.19
The VIX spike up over the 25 level on Friday and closed at 27.01.? A close today above 26.56 and it should try and test 31.25.
There is minor resistance at 28.13 and I would not expect the VIX to get through that level on the first attempt.
If it drops off of 28 and heads down, look for a bounce in the markets.
23.44 should be support.
S & P 500 Cash Index:?
Major level - 2,000.00
Minor level - 1,992.18
Minor level - 1,976.52
Major level - 1,968.80
Minor level - 1,960.88
Minor level - 1,945.33
Major level - 1,937.50
Now that the S & P 500 has closed for two days under 1,968.80, the objective to the downside should be 1,906 or 1,875.
Resistance should be at 2,000 and 1,968.
Nasd 100 (QQQ):?
Major level - 109.38
Minor level - 108.60
Minor level - 107.03
Major level - 106.25
Minor level - 105.47
Minor level - 103.91
Major level - 103.13
Major level - 100.00
103.13 should be the objective.
Resistance should be at 107.
Like the S & P 500, the QQQ is trading well under the bottom band on the 60 minute chart. The bottom band is 106.18 and Friday's close was 104.01.
It will have to close above that level before any buying comes back into the market.
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 - 117.97
Minor level - 116.40
Major level - 115.62
The TLT made another attempt at 122.66 Friday, closing at 122.25.
Two closes above 122.66 and the objective becomes
125.
GLD:
Major level - 109.38
Minor level - 107.03
Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13 *
Minor level - 102.34
Minor level - 100.78
Major level - 100.00
Two closes above 107.03 and the objective becomes 109.38.
103.13 should now be support.
XLE:
Major level - 59.38
Minor level - 58.60
Minor level - 57.03
Major level - 56.25
Minor level - 54.68 *
Minor level - 51.56
Major level - 50.00
Two closes under 54.68 and the XLE should drop to 50.
56.25 should be resistance.
Apple:
Major levels for Apple are 125, 118.75, 112.50, 106.25, 100, and 93.75. 106 should be a major support level for Apple.?
Apple broke under the lower band on the daily chart. Quite frankly, this shows you how weak Apple is trading.? Based on this,? expect another round of selling after a minor rally.
And I would expect a bounce from this oversold condition.? Will be monitoring this closely for short opportunities.
Same as Friday.? Except major downside target should be to the 75 area. Better off shorting Apple on rallies.
Watch list:
Bullish Stocks: STZ, EXR, RWM, BXLT
Bearish Stocks: CMG, FDX, UHS, AAPL, ZBRA, CFR, WSM, RL
KEX, JWN, RY, MGA, KORS, RH
Be sure to check earnings release dates.
