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 @ $.32
FEYE Long at $17.18
Total Premium Collected $0.80
CLW Long May - $20.00 call for $2.00
CLW Short May - $22.50 call for $1.00
AMC Long at $16.16
AMC Short April 18th - $16.50 call @ $0.35
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Today closes out this short week with the markets closed tomorrow for Good Friday. It also becomes the expiration for all options, both the April monthlies and the weekly options.
That means our two open positions expire after the close today.
Those positions are the short $9 call on RIG and the short $16.50 call on AMC. Hold both positions and if I suggest an adjustment, you will receive a separate email.
Now onto the markets.
The moment of truth continues. This is the term I use when the market is trying to determine which way it will go.
This happens when the market takes out a key level and begins to snake around the next minor level on the upside.
As a reminder, the key level the S & P 500 just took out is 2,890.60. And the next minor level is 2,910.15.
This has happened now for the oast four days.
Friday, the S & P 500 stopped right at the 2,910.15 line. Monday's high was just below it. And Tuesday and Wednesday, the S & P 500 managed to trade above 2,910.15, but both days, the S & P 500 could not close above it.
As you know, I use two consecutive closes above a level of validation that it has been exceeded.
And so far, that has not happened.
Hence, the moment of truth.
But, the market has not really broke yet either. Without a clear indication of what the market should do, this becomes a period of patience. This is a time where you don't want to load the boat long, nor do you want to begin shorting. Clearly, the market is overbought.
But in the larger picture, the fact that the S & P 500 took out 2,812.50 is a real sign of strength. And getting through the next level is as well. This tells us that if the market does sell off, strong support should be at the 2,812.50 level.
If that level cannot hold, I would expect the 2,734 level to hold.
On the upside, the next major level is 2,968.80.
The market usually does not get through that level on its first attempt. And that is what happened last October before the market sold off.
This is now essentially the second attempt to clear 2,968.80.
A failure and I would expect a pullback again. If the market does clear 2,968.80, I would expect it continue higher.
How much higher should be determined once we break through it. Or I should say if we break through it.
As I have said in recent updates, one of the main concerns at the moment is that the VIX is at all time lows. And yesterday it got a bit of a bid, and actually did manage to close just above 12.50.
But, I believe resistance should come in at 13.28. The VIX would at least have to have two closes above 13.28 to convince that a bottom is in.
The other main concern I have is that this last major upswing has been too fast.
Since the bottom on December 24th, 2018, the S & P 500 moved up seven major levels.
This is typically not a huge issue, but the concern I have is the time it took to make that move.
Plain and simple, the move was too fast.
All of these factors make me concerned that a pullback could happen.
So, right now, the focus is on the 2,910.15 level. If the market can close above it for two days, I expect a further move up to 2,968.80.
Yesterday's daily bar closed at only 22% of the bar. This puts the odds of violating yesterday's low before the high at about 80%.
The resistance level from yesterday's bar is in the 2,906 to 2,908 area.
And yesterday was the first day in 14 days where the range was greater than the average daily range.
Yesterday's low was 2,895.45. You want to see how the market reacts on a test.
Pre open, the S & P 500 is trading a few points higher.
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 12.60. I am still biased for resistance at the 13.28 level.
Watch to see if the VIX breaks under 12.50. It closed only 10 cents above it yesterday. Not much conviction.
12.89 is minor resistance.
On the donside, 12.11 is the key short term level to watch.
SPX:
Major level: 2,968.80
Minor level: 2,849.25
Minor level: 2,910.15 **
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
Minor level: 2,636.75
Minor level: 2,597.65
The key at the moment will be to see if the S & P 500 can close two days above 2,910.15. The minor 2,902.80 level should offer support. Same as yesterday. But, the S & P 500 did manage to close just the minor 2,902.80 level.
Watch to see if the S & P 500 can regain this level. If it can't, look for a further pullback.
2,890 should be support.
Both the 30 and 60 minute charts continue to be bullish. 2,896 is technical support.
Continue 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 finally hit its objective of 187.50 that we have been calling for.
The high was 187.93, taking out the target by 43 cents. And for the day, the QQQ closed at 187.15.
186.72 should now be minor support. And on the upside, 188.28 should be minor resistance.
Like the S & P 500, both short term charts are bullish. Technical support is at 185.70.
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 156.10. Two closes above 157.81 and the IWM should test 162.50. Two closes under 154.69 and the IWM should drop to 150.
The midband is now 156.24 and the IWM closed just it. This is the key level at the moment. A failure and I expect a further sell off.
If the IWM can clear 156.24, it should head higher.
Minor support is at 154.69.
The 30 minute chart is bullish. And the 60 minute chart just moved into an uptrend. This does suggest higher prices for the IWM.
TLT:
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 **
Major level: 121.88 <
Minor level: 121.49
Minor level: 120.70
Major level: 120.31
The TLT closed at 122.26. The TLT close just a penny under the 122.27 level.
121.88 should offer support, but it can't, I would expect support to come in at 120.31.
122.66 should be minor resistance. And 123.40 is technical resistance.
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 120.28. The GLD already hit the 120.31 level.
It is now just above the midband on the daily chart. That level is 119.27 and will most likely get tested.
The 60 minute chart still remains in a downtrend. And the 30 minute chart as well.
Technical resistance is around 122.50.
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 67.51. Still expect a move up to 68.75. The XLE is trading right between the midband, which is 68.82 and the 200 ema, which is 66.42.
These are both key support levels. So, watch for a breakout or breakdown.
67.19 is still a minor support level. This should still be a support level. If it holds, I would expect the XLE to move higher. If the XLE can move back above 67.19, look for a push higher. The XLE did manage to hold at 67.19.
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 85.05 for the second day. A close today under 85.75 would suggest a further drop. Most likely to 84.38.
Next minor level to the upside is 85.36. On the downside, 84.96 is a minor support level. If the FXY cannot hold 84.96, I would expect it to head lower.
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 203.13. This was the first close above 201.56. A close today above 201.56 and I would expect a move up to 206.25.
200.78 should offer support.
That long I suggested at the 189 area is looking pretty good. If you put it on, let me know. I mentioned it a few times in past daily updates.
WATCH LIST:
Bullish Stocks: CMG, ANET, FLT, ZBRA, SHOP, CP, MA, OLED, ADP, HON, V, ITW, CMI, DIS, ZBH, VRSK, XLNX
Bearish Stocks: NFLX, HUM, CW, MDSO, ABC, TWOU, CVS, WFC, HLF, EAT
Be sure to check earnings release dates.
