While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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
Total Premium Collected - $1.65
RRC Long at $11.85
Total Premium Collected $0.70
RIG Long at $8.81
Premium Collected - $1.13
RIG Short April 18th - $9 call @ $0.32
FEYE Long at $17.18
Total Premium Collected $0.80
Short April 12th - $17.50 call @ $0.25
FCX Long at $12.74
Total Premium Collected $0.73
Short April 12th - $13.50 call @ $0.25
CLW Long May - $20.00 call for $2.00
CLW Short May - $22.50 call for $1.00
FB Long April 12th - $172.50 Put for $1.64
FB Short April 12th - $167.50 Put for $0.58
.........................................................................................
Yesterday, I suggested selling next week's $9 call on the RIG position. This now brings the total premium collected on this position to $1.13 per share or 13% of the cost.
As a reminder, you should have sold the calls only if you own the stock.
Also, regarding the FB short position, which I did receive an email on. If you hold the position, then you realize that FB is probably one of the few stocks to move higher yesterday as the market was selling off.
Not good for our short position.
I do need to point out that you should never overtrade these short term option recommendations. The allocation I suggest is based on a $100,000 portfolio.
With a $100,000 portfolio, the allocation I suggested was 0.6% of the portfolio.
This is because an adverse move against the position in the short term will radically impact the value.
The goal in these short term positions is to risk a small portion of the portfolio in an attempt to capture outsized gains while risking an amount that will not radically impact the overall portfolio.
Yesterday saw the profit-taking we had been looking for. The main reason for this was, of course, the fact that the S & P 500 hit the upside objective we had been looking for.
But, the other main reason is that the VIX is down to all-time lows again.
The issue at the moment, is this the beginning of a bigger correction? That is always the question at these potential turning points.
I will share how I look at the facts to help determine if this is the case or not.
First off, when the market took out the 2,890.60 level, it suggests that the downside level of 2,871.08 should be support.
And yesterday's low came to 2,873.33 or about 2 points above it.
The S & P 500 would need two closes under this level to drop down to the next level. But, after hitting the upside level, it should be support ... until the market closes under it.
The other instrument to look at is the VIX.
It ended up closing at 14.28 yesterday. This was the first close above 13.28. So, a close today above 13.28 would suggest a move up to 15.63.
And I would expect resistance at the 15.63 level. So, the VIX would have to move higher than 15.63 to consider anything more than a normal pullback.
The final things I look at are the short term 30 and 60 minute charts.
I have pointed out in these updates that both short term timeframes are bullish. This implies the market should rally after finding support.
For the market to pullback deeper, I would expect at least the 30 minute chart to drop into a downtrend.
The question is where should technical support be based on these short term charts.
The first area of technical support offered by the 30 minute chart is around 2,840. that's about 40 points below where the S & P 500 closed yesterday.
So, the market could drop ahout 150 points off the top and the trend would still be bullish.
If I scale down to an even shorter intraday chart, I see that the market is literally sitting on the midband of the 10 minute chart. The midband is 2,878.30 and the close yesterday was 2,878.20.
I don't consider a 10 cent violation much of a breach, so it is still support.
But, if it fails, I would expect a drop to the lower band which is 2,854. A drop to this level would be a great buying opportunity.
Why?
Because most likely the 30 and 60 would still be in uptrends and buying at the lower band on the lower timeframe is a buying opportunity with this formation.
I hope this helps to read the levels.
Yesterday had another contraction. So, this now makes it the ninth consecutive days of range contractions.
This does tell us that an expansion should be coming.
The support area from yesterdays daily bar is in the 2,880 to 2,882 area.
Pre open, the S & P 500 is trading about 7 points higher, at around 2,889. Watch the 2,882 area if the market does pullback.
As you know, today is our regularly scheduled webinar. I hope to see you on the webinar today.
Here are the Key Levels for the Markets:
$VIX:
Major level: 18.75
Minor level: 17.97
Minor level: 16.41
Major level: 15.63
Minor level: 14.85
Minor level: 13.28 **
Major level: 12.50 <
Minor level: 11.72
Minor level: 10.16
Major level: 9.38
The VIX closed out yesterday at 14.28, up 1.10 points for the day. At this point, the VIX will need two closes above 13.28 to move up to 15.63.
I would expect resistance at the 15.63 level.
The short term 14.45 level should be minor resistance. A move above 14.45 would indicate the VIX should head up to 15.63.
SPX:
Major level: 2,968.80
Minor level: 2,849.25
Minor level: 2,910.15 **
Major level: 2,890.60 < Hit!
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
Minor level: 2,636.75
Minor level: 2,597.65
2,856.40 is a short term support level. And the market will need to close under 2,871 to move lower.
Both the 30 and 60 minute charts continue to be bullish. 2,862 is technical support.
2,880.90 is minor support.
Look to buy against support.
QQQ:
Major level: 193.75
Minor level: 192.19
Minor level: 189.06
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
Minor level: 167.19
The QQQ closed at 184.48. The upside target is still to 187.50. And the QQQ is now within 2 points of it.
184.38 is a short term support level. If the QQQ breaks above 185.94, look for a move up to 187.50.
Like the S & P 500, both short term charts are bullish. Technical support is at 184. Continue to buy against support.
IWM:
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 < HIT!
Minor level: 154.69 **
Minor level: 151.56
Major level: 150.00
Minor level: 148.44
The IWM closed at 155.20. It now closed back under the midband which is 156.12. Wait to see if this is a valid breakdown.
I am biased for the IWM to recapture this level.
Look for the IWM to try and recapture the 156.25 level.
TLT:
Major level: 128.13
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
Minor level: 124.61
Minor level: 123.83 **
Major level: 123.44 <
Minor level: 123.05
Minor level: 122.27
The TLT closed at 123.98. Biased for a retest of 125.
123.83 should be minor support. And if that does not hold, look for 12.44 to hold.
Technical support is at 123. If this level cannot hold, I would expect the TLT to drop.
GLD:
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
Minor level: 124.22
Minor level: 122.66 **
Major level: 121.88 <
Minor level: 121.09 **
Minor level: 119.53
Major level: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75
The GLD closed at 123.15. A close today above 122.66 would suggest a move up to 125.
122.66 should now be minor support.
The 60 minute chart still remains in a downtrend. And now the 30 minute chart crossed into a downtrend. This now suggests that rallies should be sold. However, the daily has moved into an uptrend.
Technical resistance is around 123.
XLE:
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
Minor level: 64.85
Minor level: 63.28
Major level: 62.50
Minor level: 61.72
Minor level: 60.16
Major level: 59.38
The XLE closed at 67.08. Still, expect a move up to 68.75. The XLE will have to recoup 67.97 to move higher.
67.19 is a minor support level. If the XLE holds this level this morning, it should head higher.
The XLE continues to move towards the midband which is 68.83. Clearing that level is another issue. But, I am biased for the XLE to clear the midband.
I would expect strong support at the 65.63 level.
Short term charts remain bullish. Buy against support.
FXY:
Major level: 89.84
Minor level: 89.65
Minor level: 89.26
Major level: 89.06
Minor level: 88.87
Minor level: 88.48
Major level: 88.28
Major level: 87.50
Major level: 86.72
Major level: 85.94 <
Minor level: 85.75 **
Minor level: 85.36
Major level: 85.16
Minor level: 84.97
The FXY closed at 85.82. Watch to see if the FXY can clear 85.94. It should be resistance, so if it can get above it, I would expect a bounce.
Still biased for a drop to 85.16.
Technical resistance is still around 86. The FXY is right at this level. either it clears it or fails.
AAPL:
Major level: 206.25
Minor level: 204.69
Minor level: 201.56
Major level: 200.00 <
Minor level: 198.44 **
Minor level: 195.31
Major level: 193.75
Minor level: 192.19
Minor level: 189.06
Major level: 187.50
Apple closed at 199.50. Now that 200 has been hit, I would expect support at 198.44.
Technical support is around 198 as well. Still buy against support.
WATCH LIST:
Bullish Stocks: ULTA, AVGO, FLT, COST, MMM, AMGN, MCD, OLED, CMI, ALXN, XLNX, WST, PYPL, SBUX, FL, CREE, CSCO, CRUS, BEN
Bearish Stocks: PEN, RH, FANG, SQ, ABC, XEC, COP, MC, SAIL, BITA
Be sure to check earnings release dates.
