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
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DUST Long $4.50
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DYN Long at $12.55
Premium Collected $0.48
APA Long Oct $47.50 Call at $3.45
WDC Long Aug 18th-$82.50 call at $1.44
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We have been discussing the fact that the market had once again gone into a series of narrow range trading days. And as you know, this usually portends of an expansion to follow.
Certainly yesterday qualified as an expansion. The range for the day was 20.55 points, almost four time the range from Monday. And almost double the average true range.
The high for the day fell about 10 points short of our objective. We have been looking for a price target of 2,500 and the high was 2,490.87.
And volatility certainly returned with the VIX spiking almost 11% yesterday.
All the quiet summer market action has been disturbed by a certain unstable world leader making threats on the US.
Considering this market has been driven up by the prospects of a business friendly administration in Washington, I suspect that perhaps world politics could also drive it back down.
One we know for certain is that markets don't like uncertainty and that is what we have at the moment.
The million dollar question at the moment is this ... does this spell the end of the bull market?
At this point, I have to answer no.
I say this for a few reasons. The first is the fact that the short term charts for the S & P 500 are still in uptrend formations. This tells us that a rally should happen before any major rollover of the markets.
The second reason is that I would expect the VIX to clear 12.50 before a major pullback would occur in the markets. Should the VIX clear 12.50, I would expect more movement to the upside on the VIX.
2,453 should be a level of support for the S & P 500. The market should open lower this morning, so I would watch to see if this level holds as support. If it doesn't, look for further downside.
PCLN should open about $134 lower this morning after reporting.
Continue to follow the resistance levels.
Here are the Key Levels for the Markets:
$VIX:
Minor level: 16.41
Major level: 15.63
Minor level: 14.84
Minor level: 13.28
Major level: 12.50
Minor level: 11.72
Minor level: 10.16 **
Major level: 9.38 <
Minor level: 8.60 **
Minor level: 7.03
Major level: 6.25
The VIX is trading above the upper band on its 30 minute chart. This tells us that it is overbought short term ... and to expect a rally once it does drop back inside the bands.
Look for the VIX to open around 12.50. If it does get through that level, I would expect it to continue higher.
11.33 should be minor support on a higher open.
$SPX:
Major level: 2,500.00
Minor level: 2,484.38
Minor level: 2,453.12 <
Major level: 2,437.50 **
Minor level: 2,421.88
Minor level: 2,390.62
Major level: 2,375.00
Minor level: 2,359.38
Minor level: 2,328.12
Major level: 2,312.50
The S & P 500 should open just under the 2,468.80 level. Support should come in around 2,453. If it doesn't, I would expect a move down to 2,437.
The market took out the 2,484 target by about 6 points and fell short of the 2,500 objective.
QQQ:
Major level: 150.00
Minor level: 148.44
Minor level: 145.31 ***
Major level: 143.75 <
Minor level: 142.18
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81
The QQQ closed at 144.31 yesterday. It is holding just above the major 143.75 level, which should be support.
The key level on the downside is 143.36. If the QQQ breaks under that price, it could drop to 142 in the short term.
IWM:
Major level: 146.88
Minor level: 146.09
Minor level: 144.53
Major level: 143.75 **
Minor level: 142.97
Minor level: 141.41 ***
Major level: 140.63 <
Minor level: 139.85
Minor level: 138.28
Major level: 137.50
The IWM closed at 140. It did test 140.63 and sold off.
It held just above the 139.84 minor support level.
The key level on the downside will be 139.84. A break under that level and I would expect the IWM to drop to 137.
TLT:
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00 <<
Minor level: 124.61 **
Minor level: 123.83
Major level: 123.44
Minor level: 123.03
With this uncertainty, expect the TLT to move up. Look for support at 125 and 125.39.
GLD:
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88
Minor level: 120.32
Minor level: 119.53 <<
Major level: 118.75 **
Minor level: 117.97
Like the TLT, the GLD should move up as well.
121.09 should be minor support and 123.44 minor resistance.
XLE:
Minor level: 69.53
Major level: 68.75 <
Minor level: 67.97
Minor level: 66.41 **
Major level: 65.63 <<
Minor level: 64.85
Minor level: 63.28
Major level: 62.50
Minor level: 61.72
A close today under 64.85 and the XLE should drop to 62.50.
64.05 should be minor support. And 65.63 resistance.
FXY:
Minor level: 87.89
Major level: 87.50
Minor level: 87.11 <
Minor level: 86.33
Major level: 85.94 **
Minor level: 85.55
Minor level: 84.77
Major level: 84.38
Minor level: 83.60
Minor level: 83.20
Major level: 82.81
Look for 86.91 to offer minor support. If the FXY can get above 87.50, look for support at 87.30 as well. Resistance is at 87.89.
AAPL:
Major levels for Apple are 162.50, 159.38, 156.15, 153.13, and 150.
Apple same within 17 cents of the 162 target. 156.25 should be support. If ti breaks unde that level, a drop to 150 could happen.
WATCH LIST:
Bullish Stocks: LMT, NOC, HUM, BIDU, STMP, UNH, LLL, RTN, ALGN, AET, AAPL, VRTX, CB, SYK, ACN, RCL, COL, AMT
Bearish Stocks: PANW, JACK, PRGO, WAGE, TEN, SGEN, CAKE, FLS, OMI
Be sure to check earnings release dates.
