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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With the low close percentage on Thursday, we were expecting the low from Thursday to be violated before the high from Thursday.
And with Friday's gap open to the downside, that was certainly the case. Friday, the market opened almost 19 points to the downside.
The market opened right at the lower band on the short term 10 minute chart. And with the 30 minute chart in a uptrend, that set up is generally a buy. And as it turned out, it was.
From the lower band on the 10 minute chart, the S & P 500 rallied the balance of the day to close at 2,691.25.
The extreme bands can help to determine if a bounce is expected in the market.
Having said that, the question is this ... does this mean the pullback is over?
As I mentioned, Friday the market closed at 2,691.25. The midpoint of Thursday's daily price bar was 2,695.27. A close above the midpoint would have been bullish and Friday's close was about 4 points below closing above the midpoint.
It also happens that that a major resistance line is at 2,695.35, which is within 10 cents of Thursday's midpoint. This is a key level to watch. And at this point, it should still be resistance. If the market can get above it, it would then become support.
When we scope out to last week's weekly price bar, we see that the S & P 500 closed 56.05 points to the downside.
And for the week, the S & P 500 had a range of 141.83 points. When compared to the average rue range of 67.37, last week's range was over 200% of the average. This tells us that selling pressure intensified last week.
And resistance from last week's weekly price bar should be in the 2,718 to 2,724 area.
On the downside, support from last month's monthly price bar is in the 2,625 area and maybe tested.
And I do believe the S & P 500 could drop to 2,578 and the trend would still be bullish. And 2,656.30 should provide major support if 2,578 is violated.
Here are the Key Levels for the Markets:
$VIX:
Major level: 31.25
Minor level: 29.69
Minor level: 26.56
Major level: 25.00
Minor level: 23.44
Minor level: 20.31 **
Major level: 18.75 <
Minor level: 17.19 **
Minor level: 14.06
Major level: 12.50
Minor level: 10.94
The VIX ended up closing at 19.64. The high for the day was 26.22, before the VIX broke and close under the 25 level. We had been looking for resistance at 25 and if the VIX moved down, it would confirm the move up in the markets.
At this point, a close today under 23.44 would indicate a drop to 18.75. I would expect support at 18.75 on the first test.
$SPX:
Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93
Major level: 2,734.40
Minor level: 2,714.88
Minor level: 2,675.83
Major level: 2,656.30 <
Minor level: 2,636.75
Minor level: 2,597.65 **
Major level: 2,578.10
Friday's low took out the 2,656.30 level, with a low of 2,647.32. 2,695 should still be resistance.
If the S & P 500 can close above the 2,597.65 level, a retest of 2,656 is possible.
On the downside, minor support is at 2,646.50. Two closes under 2,646.50 and the downside objective should be 2,500.
QQQ:
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
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
The QQQ closed at 165.99. The QQQ did test 162.50 Friday, dropping to a low of 161.96, before recovering to close higher.
A close today above 164.06 would indicate a move up to 168.75.
IWM:
Minor level: 157.03
Major level: 156.25
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.35 **
Minor level: 150.78
Major level: 150.00 <
Minor level: 149.22
Minor level: 147.66
Major level: 146.88
The IWM closed at 152.35, closing exactly on the minor 152.35 level. A close today above 150.78 and the IWM should test 153.13.
150 should offer support. Also, 148.44 should also offer support.
TLT:
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75 <
Minor level: 118.36 **
Minor level: 117.58
Major level: 117.19 <
Minor level: 116.80
Minor level: 116.02
Major level: 115.63
The TLT closed at 118.35. A close today under 118.36 and the TLT should test 117.19.
At this point, I would expect the TLT to bounce around. It is oversold and on the outside, I do not see the TLT breaking under 115.63. If it does, expect it to move lower.
GLD:
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: 124.22
Minor level: 122.66
The GLD closed at 125.39. 125.78 is a minor resistance level. Watch to see if the GLD can clear this level.
Two closes above 125.78 and the GLD should move up to 128.
The next level on the downside after 125, is 124.22. A break under 124.22 and the GLD should drop
to 121.88.
XLE:
Minor level: 76.95
Major level: 76.56
Minor level: 76.17
Minor level: 75.39
Major level: 75.00
Minor level: 74.22
Minor level: 72.66
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
Major level: 68.75 <
Minor level: 67.97
Minor level: 66.41 **
Major level: 65.63
The XLE closed at 66.95. Friday, the XLE did test 65.63 level, as expected. The low for the day was 65.65 before support came in, as expected.
A close today above 66.41 and the XLE should test 68.75. The midband on the daily chart is 67.20. Watch to see if the XLE can clear this level. If it can't, it should continue down.
FXY:
Major level: 91.41
Minor level: 91.22
Minor level: 90.83 **
Major level: 89.06 <
Minor level: 88.87
Minor level: 88.48
Major level: 88.28
Minor level: 88.09
Minor level: 87.70
Major level: 87.50
Minor level: 87.31
Minor level: 86.92
The FXY closed at 90.74, jumping .43 on Friday. We expected this based on the the fact that Thursday, the FXY closed back above the upper band.
I mentioned Friday that the FXY is "Showing unusual strength at the month. Not time to short."
90.63 should now be support.
AAPL:
Major level: 181.25
Minor level: 180.47
Minor level: 178.91
Major level: 178.13
Minor level: 177.35
Minor level: 175.78 **
Major level: 175.00 <
Minor level: 174.22
Minor level: 172.66
Major level: 171.88
Apple closed at 176.21. This now implies that if Apple can close above 175.78 today, it should test 178.13.
175 should offer support.
WATCH LIST:
Bullish Stocks: MELI, NFLX, BLUE, PANW, RHT, WDAY, DNB, WDAY, MON, CRM, KLAC, MKC, GRUB, LULU, DIN, AKAM, AKAM, MSCC, AMAT, X
Bearish Stocks: CHTR, ADX, MLM, WHR, AGN, ZBH, EXPE, DLR, ALB, MDT, RBC, CVS, IRBT, KHC
Be sure to check earnings release dates.