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
ASNA Long at $14.20
Total Premium Collected $0.75
DUST Long $4.50
Total Premium Collected $0.70
AMC Long at $15.27
Premium Collected - $2.80
Short March $16 call @ $0.55
UNIT Long at $17.00
Premium Collected - $0.35
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You should have closed out the VIPS position yesterday. If you followed the alerts that were suggested, you would have booked a profit on 13.8% for holding the stock for about two weeks. Cash return based on the suggested allocation of 400 shares would work out to $952 before commissions and slippage.
If VIPS gives us a decent entry, I would put this trade back on as the weekly option premiums are worth collecting.
After the narrow range day from Monday, the S & P 500 sold off. The range for the day also expanded on the downside.
For the day, the S & P 500 closed at 2,765.31, down 17.71 points.
However, after the open, the market ran up to a high of 2,801.90, which was 10.6 points short of our 2,812.50 objective. After topping out, the S & P 500 dropped to a low of 2,758.68. The range for the day ended up being 43.22 points, or 250% of the range from Monday.
The average true range is now 40.27 points, so yesterday's range was just slightly above the average.
I point this out because it seems like a day out of the norm, but really is wasn't. It was just a return to the average after a narrow range.
The question for today is what can we expect?
First off, with the close yesterday at the low end of the daily price bar, I would expect the low to be violated before the high.
And pre open, the market is trading about 7 points to the upside. If conditions remain the same into the open, the S & P 500 should open around 2,772.
Resistance from yesterday's daily price bar is in the 2,778 to 2,780 area. So if the market rallies off the open and tests that area, watch to see if it falters there.
On the downside, 2,744 area should offer support. Or at least I would expect support to enter around that level. Watch the VIX for a reversal to the downside for long entries.
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 16.35. I still expect higher levels to offer resistance. Namely, at the 17.19 level and the 18.75 level. Watch to see if the VIX fails, or get get through 17.19.
If it can a test of 18.75 is the next likely scenario.
Short term charts remain bearish, so I do expect resistance at higher levels.
$SPX:
Major level: 2,890.60
Minor level: 2,871.08
Minor level: 2,832.03
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
The upside objective should still be to the 2,812.50 level. Yesterday, the S & P 500 cleared the 2,793 level, but failed to hold it.
Watch to see if the S & P 500 can hold the 2,744.10 level.
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 171.71. The QQQ took out the 175 objective, hitting a high of 175.21 before selling off.
170.31 should offer minor support. Watch to see if this level holds.
Also, both short term 30 & 60 minute charts are in uptrends. So, the QQQ should find support after this pullback.
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
The IWM closed at 158.46. The IWM hit the minor 160.16 level before pulling back.
At this point, I would expect support 157.81. And I don't see the IWM breaking under 156.25, but if it does, it should head lower.
Short term charts are bullish.
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 119.19. This is the first close above the minor 119.14 level. A close today above 119.14 and the TLT should test 120.31.
Minor resistance should be at 119.53. And watch to see if the TLT can clear 119.92 in the short term.
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 125.78, exactly on the minor level. The GLD would still need two closes above 125.78 to test 128.13.
The next level on the downside after 125, is 124.22. A break under 124.22 and the GLD should drop to 121.88.
Short term charts remain bearish, so I am biased to the downside.
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 67.94. The XLE continues to trade around the midband on the daily chart. The midband is now 67.17 and the XLE is starting to move up and away from it. It should offer support.
If the XLE can clear 68.75, it should head up to the 75 area. The XLE did hit the 68.75 level, but could not hold it.
Still trading in a range between the 65.73 and 68.75 levels.
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 89.99. It is retesting the upper band on the daily chart. That price level is 90.48.
I am still biased for a retest of the 90.63 level, but if the FXY cannot clear 90.23, it may break further.
An uneven straddle could be the trade strategy at the moment. In this set up, you would buy puts and buy 1/2 the amount of calls, in the event the FXY does retest the upper band.
AAPL:
Major level: 187.50
Minor level: 185.94
Minor level: 182.81
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
Apple closed at 179.97. At this point, 175 should continue to be strong support on a pullback.
I have been to continue to buy against support. Continues to be the best strategy.
WATCH LIST:
Bullish Stocks: AMZN, NFLX, GWW, GS, BIDU, AVGO, BLUE, STZ, DPZ, GD, LRCX, ADBE, PANW, AAPL, VRTX, CME, WEX, RHT, ADSK, CRM, SINA, KLAC, GRUB, VRSK, HLF
Bearish Stocks: DTE, BG, CNI, OMC, AIG, NWE, SIG, HOG, SLCA, NS
Be sure to check earnings release dates.