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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Yesterday, we got the anticipated bounce in the market, from its oversold condition. For the day, the S & P 500 closed 32.57 points to the upside. It closed at 2,614.45.
The bounce was expected because the S & P 500 was sitting right at the lower bands on the 30 & 60 minute charts. We will look at this on today's webinar.
In fact yesterday I said this ... "The other factor yesterday was that the S & P 500 stopped at the lower extreme band on both its 30 & 60 minute charts.
This tells us to expect a bounce."
And speaking of the short term charts, the 60 minute chart has just crossed into a downtrend. This brings the 60 and 30 minute charts into aligned. This suggests more movement to the downside.
And pre open, the S & P 500 is trading about 36 points to the downside. The DOW is down around 460 points.
Assuming there is no rally before the open, the S & P 500 should open around 2,578. 2,578 is a support level that has been our short term objective. A violation of 2,578 puts the downside objective for the S & P 500 clearly at 2,500.
This would mean the midband on the daily chart should be monitored. The midband for the S & P 500 is 2,548.66.
And as you know, after the breach of the upper band, this level usually becomes the objective and a support level.
A breach if this level and the lower band becomes the objective.
The lower band is 2,197.91.
Having said that, I do expect support at 2,500. However, if the 2,500 level is violated, there is a strong possibility that the market could drop that low. But, we have levels under the market that should confirm that.
At this point, I will not share what they are and what conditions are required for the market to drop that low.
This daily update will keep you informed.
With a projected open at 2,578.45 the S & P 500 would open about 20 points under the 200 ema.
The 200 ema would now become resistance. That level is 2,599.21. On a bounce, I would expect resistance there.
Continue to monitor the longer term levels for the market.
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 closed at 21.10 yesterday. Yesterday's high was 23.38, or about 26 cents under the upper band on the daily chart.
The upper band is now 23.86. If the VIX takes out the upper band, it should continue higher.
25 is also a strong resistance level for the VIX. If this is exceeded, I would expect the VIX to continue higher.
$SPX:
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 <
Minor level: 2,558.58
Minor level: 2,519.53
Major level: 2,500.00
Based on the projected open, the 2,578.10 will clearly be challenged today. Watch to see if it offers any support. If it doesn't, a drop to 2,500 is imminent.
Also, the mid band needs to be monitored and that level is 2,548.
2,558.58 is the confirming line under 2,578.10. Two closes under 2,558.58 and the downside target becomes 2,500.
The 200 ema is still above the 253 day average on the daily chart, so I cannot say we have rolled over into a bear market. But, it is looking more and more like it will.
QQQ:
Minor level: 165.63
Major level: 162.50
Minor level: 159.38 **
Minor level: 153.13 **
Major level: 150.00
Minor level: 146.88
Minor level: 140.63
Major level: 137.50
The QQQ closed at 157.26. At this point, I am looking for resistance at 159.38.
Looking for a drop to 150.
IWM:
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 150.25. The IWM should open under 150. The minor 149.22 level is the level to watch.
Two closes under 149.22 and the downside objective becomes 146.88.
With an anticipated open under 150, it will now become resistance.
TLT:
Major level: 123.44
Minor level: 123.05
Minor level: 122.27 **
Major level: 121.88 < Hit
Minor level: 121.49
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75
Minor level: 118.36
The TLT closed at 120.94, under the minor 121.49 level. This now tells us that if the TLT closes under 121.49 today, it should test 120.31.
120.31 should offer support.
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
Major level: 121.87
The GLD closed at 126.30. Watch the minor 126.56 level today. If the GLD breaks under that level, it could drop to 125. Same as yesterday.
125 should continue to be support.
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 67.47. It continues to hold just above the 65.63 level. 65.63 should offer support.
If the XLE cannot hold the minor 67.19 level, it will most likely retest 6563 again.
FXY:
Major level: 92.19
Minor level: 92.00
Minor level: 91.61
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
The FXY closed at 89.85. 89.45 is a short term support level. A break under that and it should continue lower.
Also, a close today under 90.83 and the FXY should test 88.87.
AAPL:
Minor level: 178.91
Major level: 178.13
Minor level: 177.35
Minor level: 175.78
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
Apple closed at 168.39. 168.75 should be resistance. At this point, I am looking for a drop to the 150 area.
Sell rallies.
WATCH LIST:
Bullish Stocks: DPZ, SBAC, GWW, AMT, RL, CCI, EXP, PSX, LULU, PGR, PEG, DK, WY, CNQ, LPX, MDU
Bearish Stocks: TSLA, WHR, ALXN, ZBH, SWKS, ALB, ALK, MDSO, DIS, WAGE, SIG, WPZ, JNPR, BITA
Be sure to check earnings release dates.