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
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
P Long $13.38
Short Jan $14 Call - $.35
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I mentioned in Friday's update that the pre market reaction to the unemployment report was rather tepid.
However, the day's trading was anything but that.
The S & P 500 proceeded to fall just over 35 points on the day.
For the week, the S & P fell over 60 points, erasing all the gains from the prior two weeks.
And this morning before the open, the selling pressure is continuing, with the S & P 500 down 25 points as I write this.
At this point, it appears that 1,812 will be taken out. This would pave the way to move to 1,750.
Another concept I mentioned last week was that on Thursday BOTH the S & P 500 and the VIX closed to the upside.
This is a divergence I look for that usually leads to a large move in the markets. It is not necessarily true that the move will happen the next day, like it did Friday.
The last time both the VIX & the S & P 500 closed to the upside was on Tuesday January 12, 2016. The next day the S & P 500 did drop almost 50 points.
Prior to that, they both closed to the upside on Tuesday November 24, 2015. The market spent five days before it hit a pivot high and sold off.
The point is this oftentimes precedes a reversal in the market and potentially a large move.
It is worth paying attention to.
On a final note, LNKD had one of the largest earnings moves I have seen in a long time. It ended up closing down $83.90 or 43.63%. This should set up opportunities to short after a bounce.
Here are the key levels for the markets.
VIX:
Major level - 37.50
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 - 17.19
The VIX should take out 25 this morning, or at least I would expect that.
Two closes above 26.56 and the objective is to 31.25.
Lower levels should act as support.
S & P 500 Cash Index:
Major level - 1,937.50
Minor level - 1,921.88
Minor level - 1,890.62 *
Major level - 1,875.00
Minor level - 1,859.38
Minor level - 1,828.12
Major level - 1,812.50
The S & P broke under the 1,890 level in the morning on Friday. At that point, 1,890 should have been resistance.
Intraday, the S & P rallied back to 1,891.97 before selling off the remainder of the day.
The S & P should open around 1,855 this morning.
1,875 should be resistance and if the S & P closes for two days under 1,859.38, it should drop to 1,812.50.
Nasd 100 (QQQ):
Major level - 106.25
Minor level - 105.47
Minor level - 103.91
Major level - 103.13
Minor level - 102.35
Minor level - 100.78
Major level - 100.00
Minor level - 99.21 *
Minor level - 97.66
Major level - 96.88
Friday, the QQQ caught up with the S & P and the DOW.
It broke under the 100 level, closing at 98.12.
A close today under 99.21 and the objective becomes 96.88.
Higher levels should act as resistance.
96.88 is a major level for the QQQ because if it closes for two days under that level, it could drop down to 87, which is another 10% from the current levels.
TLT:
Major level - 131.25
Minor level - 128.91 *
Major level - 128.13
Minor level - 127.34
Minor level - 125.78
Major level - 125.00
Minor level - 124.22
Minor level - 122.66
The TLT still needs two closes above 128.91 to move higher to 131.
Lower levels should act as support.
GLD:
Minor level - 113.28
Major level - 112.50
Minor level - 111.71
Minor level - 110.16
Major level - 109.38
Minor level - 107.03
Major level - 106.25
The objective above 112.50 is 115.60.
Lower levels should act as support.
The GLD will need two closes above 113.28 to move to 115.
XLE:
Major level - 59.38
Minor level - 58.60
Minor level - 57.03
Major level - 56.25
Minor level - 54.69 *
Minor level - 53.19
Major level - 53.13
Minor level - 51.56
Major level - 50.00
Minor level - 43.75
The XLE closed Friday at 55.94, just under the 56.25 level.
Two closes under 54.69 and the objective becomes 53.
Apple:
Major levels for Apple are 112.50, 106.25, 100, 93.75, and 87.50.
Apple is back to retesting the 93.75 level.? This is a very key level because two closes under 93.75 sets up a bearish scenario.? A move to 75 could be possible if it breaks under 93.75.
Watch list:
Bullish Stocks: KMB, FXE, DLR, ATO, ED, WEC, O
Bearish Stocks: TSLA, BWLD, ALXN, MNST, PII, BIDU, VRTX, SWK, GILD, LAD, HAR, TRIP, BABA, Q
Be sure to check earnings release dates.
