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.
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I proposed this question yesterday ... "Does yesterday mark the end of the bull market?"
The conclusion I came to was this ... "No, I don't think so."
But, there are a couple of facts worth pointing out. The first is that there were multiple days where both the S & P 500 and the VIX diverged.
In the recent scenario, both the VIX and the S & P 500 had closed to the upside. Usually this divergence indicates that a change in direction will happen. It does not necessarily mean the trend will change.
The second situation is the upper band on the daily chart.
The upper band is now 2,776.64. For a larger pullback to happen, I would expect the S & P 500 to close back inside the upper band on its daily chart.
This would be bearish. And with Tuesday's sell off, the close was right around the the upper band. Had the market closed under the upper band, it would have set up bearish consequences.
The final situation, which I have been mentioning, is that the short term 30 minute and 60 minute charts were still in strong uptrends. Even with the sell off on Tuesday. So, a rally would be expected.
Yesterday's high came back to 2,807.04. This was within 50 cents on the high on Tuesday, after the bullish gap.
Support from yesterday's daily price bar should be in the 2,793 area.
The VIX hit a high of 12.81 yesterday, before dropping to close at 11.91. 12.50 should still be resistance on the VIX.
The S & P 500 is trading slightly to the downside before the open.
Here are the Key Levels for the Markets:
$VIX:
Major level: 14.06
Minor level: 13.67
Minor level: 12.89
Major level: 12.50 <
Minor level: 12.11
Minor level: 11.33
Major level: 10.94
Minor level: 10.55
Minor level: 10.16
Major level: 9.38
Minor level: 8.99
Minor level: 8.20
Major level: 7.81
The VIX closed at 11.91. At this point, I would still expect 12.50 to offer resistance.
For the bull market to continue, I would not expect the VIX to exceed 12.50. If the VIX takes out 12.50 and hits 14.06, it would make me concerned that this sell off could be a bit deeper.
12.11 should offer minor resistance.
I do need to point out that both the VIX and the S & P 500 closed to the upside yesterday, creating another divergence.
$SPX:
Major level: 2,812.50 <
Minor level: 2,792.98
Minor level: 2,753.93 **
Major level: 2,734.40
Minor level: 2,724.23
Minor level: 2,705.07
Major level: 2,695.30
Minor level: 2,685.55
Minor level: 2,666.05
Major level: 2,656.30
Minor level: 2,646.53
2,812.50 is still the active objective. And yesterday's high came within 5 points of the target.
This is a key level, because if the S & P 500 cannot clear 2,812.50, a pullback should happen.
2,797.90 should now be minor support. 2,788.10 should also offer minor support.
QQQ:
Major level: 168.75
Minor level: 167.19
Minor level: 164.06 **
Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
Minor level: 155.47
Minor level: 153.91
The QQQ closed at 165.79. A close today above 164.06 and the QQQ should test 168.75.
The 164.06 level should now act as support.
IWM:
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
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
The IWM closed at 157.62. A close today above 157.03 and the IWM should test 162.50.
The upper band on the daily chart is 158.60. If the IWM cannot clear this level, a deeper pullback could happen. Watch to see if this level can be cleared.
TLT:
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13
Minor level: 127.35
Minor level: 125.78 **
Major level: 125.00 <
Minor level: 124.61
Minor level: 123.83
Major level: 123.44
Minor level: 123.05
The TLT closed at 124.87. The TLT hit the 125 level and pulled back. I do believe 125 should offer resistance. If the TLT cannot clear 125, it should head back down.
Two closes under 124.61 and the objective should be 123.44.
Minor level is 124.60. It the TLT breaks under 124.60, that would also be bearish.
GLD:
Major level: 128.13
Minor level: 127.35
Minor level: 125.78 **
Major level: 125.00 <
Minor level: 124.22 **
Minor level: 122.66
Major level: 121.88
Minor level: 121.10
Minor level: 119.53
Major level: 118.75
Minor level: 117.96
The GLD closed at 126.14. I am still biased for a test of 128.13.
127.34 should offer minor resistance. And 125.78 should offer minor support.
XLE:
Major level: 78.13 <
Minor level: 77.74
Minor level: 76.95 **
Major level: 76.56
Minor level: 76.17
Minor level: 75.39
Major level: 75.00
Minor level: 74.61
Minor level: 73.83
Major level: 73.44
Minor level: 72.66
The XLE closed at 77.11. A close today above 76.95 would confirm a test of 78.13.
The XLE is above the upper band on the daily chart, so it is overbought short term.
76.56 should offer support.
FXY:
Major level: 87.50
Minor level: 87.31
Minor level: 86.92
Major level: 86.72 <
Minor level: 86.53
Minor level: 86.14
Major level: 85.94
Minor level: 85.75
Minor level: 85.36
Major level: 85.16
The FXY closed at 86.30. At this point, I would expect support at 85.94. If this level is taken out, I would expect 85.16 to hold.
85.55 is a minor level to watch. If the FXY has two closes under this level, it should retest 84.38 again.
AAPL:
Major levels for Apple are 178.13, 175, 171.88, 168.75, 165.63, and 162.50.
Apple reversed and closed at 179.10. 179.69 is a minor resistance level.
For Apple to head higher, it will need to take out 179.69.
177.56 should offer short term support.
WATCH LIST:
Bullish Stocks: AMZN, GOOGL, SHW, TSLA, BA, NOC, SPY, FDX, FLT, RTN, AMGN, CMI, AAPL, EOG, JPM, WDAY
Bearish Stocks: SLG, KMB, KHC, EPR, NGG, JACK, O, NUVA
Be sure to check earnings release dates.