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
SNAP Long at $14.54
Premium Collected - $1.65
BERY Long Sept $50.00 Call at $2.70
FEYE Long at $16.69
Total Premium Collected - $0.93
..........................................................................................
You should have closed out the short September $55 call on BERY, if you followed the alert from yesterday. The profit worked out to be $25 per contract. But, by closing the short position, the long calls are back to unlimited upside potential.
The S & P 500 closed 10.05 points to the upside. It closed at 2,850.40. We were expected a move higher based on the 100% close ratio from Friday.
The close ratio can give you a rough idea as to what the odds of a violation of the high or low can be.
Let me explain.
The close ratio is simply the percent of the price bar where the market closes.
Take the close minus the low and divide that by the range for the day and it gives you the close ratio.
For example, on Friday, that ratio came in at 100%.
This becomes an inverse relationship. For example, if the close ration is 30%, then I assume there is a 70% chance that the low will be violated before the high.
If it is 10%, then the odds are 90% that the low becomes violated before the high.
This does not mean that the price will drop after violated the high. Or that the price will not rise after a low is violated.
There are other factors that affect that.
But, yesterday with the high close ratio and both the 30 and 60 minute charts in uptrends, you would expect that Monday would have closed towards the high of the day.
And it did. The S & P 500 closed at 83% of the daily range yesterday.
So, that gives us a roughly 80% chance that the high will be violated before the low.
And pre open, the S & P 500 is trading about 6 points higher. This project an open at around 2,856 or about 3 points above yesterday's high.
Based on this, watch 2,853 and 2,850 as possible support levels if the market does pullback.
And finally, support from yesterday's daily price bar is in the 2,845 area.
Support from last week's weekly price bar is in the 2,818 to 2,830 area.
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 11.27. At this point, I am looking for a test of 10.94.
Minor support is at 10.16. If the VIX takes out 10.16, it should head lower.
Resistance is at 12.50.
SPX:
Major level: 2,890.60
Minor level: 2,878.40
Minor level: 2,854.00 **
Major level: 2,841.80 <
Minor level: 2,829.60
Minor level: 2,805.20
Major level: 2,793.00
Minor level: 2,780.78
Minor level: 2,756.33
Major level: 2,744.10
Now that the S & P 500 has cleared the 2,841 level, the key level to watch will be 2,854.
Two closes above 2,854 would put the objective for the S & P 500 at 2,890.60.
Having said that, if the market cannot clear and close above 2,854, profit taking may set in. This is because the market has now run three major levels, which we expect in a bull market. And the next upside level often acts as resistance after running this distance.
2,837.70 is also a minor support level.
QQQ:
Major level: 187.50
Minor level: 185.94
Minor level: 182.81
Major level: 181.25
Minor level: 179.69 **
Minor level: 176.56
Major level: 175.00 <
Minor level: 173.44
Minor level: 170.31
Major level: 168.75
The QQQ closed at 181.14. The QQQ is now within 13 cents of the 181.25 objective.
181.25 is a key level. If the QQQ can close above this level for two days, it could run all the way up to 200.
179.69 should be support levels.
IWM:
Major level: 171.88
Minor level: 171.10
Minor level: 169.53
Major level: 168.75
Minor level: 167.97
Minor level: 166.41
Major level: 165.63 <
Minor level: 164.85
Minor level: 163.28
Major level: 162.50
The IWM closed at 167.32. I would expect a test of 168.75.
166.41 should be minor support.
And 165.63 should be major support.
TLT:
Major level: 123.44
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
Minor level: 117.58
Major level: 117.19
The TLT closed at 119.29. The target should be back up to 120.31
119.14 should now be support. And minor resistance is at 119.92.
GLD:
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
Minor level: 114.85 **
Minor level: 113.28
Major level: 112.50 <
The GLD closed at 114.33. If the GLD closes under 114.85 today, it should test 112.50.
114.84 should be resistance. Minor support is at 113.28.
XLE:
Major level: 78.13 <
Minor level: 77.35
Minor level: 75.78 **
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
The XLE closed at 75.52. The low for the day was 75.01. We expect support at that level and it held again.
75.39 is minor support. If the XLE can clear 76.17, I would expect it to move up to 78.
FXY:
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
Minor level: 84.97
Minor level: 84.58
Major level: 84.38
The FXY closed at 85.86. 85.36 should be minor support.
If the FXY can clear 86.13, it should be heading higher.
AAPL:
Major level: 212.50
Minor level: 211.00
Minor level: 208.00 **
Major level: 206.25
Minor level: 204.88
Minor level: 201.63
Major level: 200.00
Minor level: 198.44
Minor level: 195.31
Major level: 193.75
Apple continued higher and closed at 209.07.
A close today above 208 and Apple should run to 212.50.
$206 should be support, as well as $207.81. I expect a move up to 212.
WATCH LIST:
Bullish Stocks: SPY, COST, AAPL, ASML, UNP, PAYC, AAP, DXCM, KLAC, JPM, SODA, WST, MSFT
Bearish Stocks: BIDU, STZ, WAT, BABA, URI, CBOE, ALB, ALNY, SINA, TSN, AIG
Be sure to check earnings release dates.