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 - $1.55
Short May 3rd - $9.50 Call for $0.42
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
Total Premium Collected $0.35
DAL Long April 26th - $57.50 at $0.58
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Yesterday I suggested two positions. The first is the short May 3rd - $9.50 call on RIG. This now brings the premium collected on this position to about 20% of the purchase price.
I also suggested a straight weekly call on DAL. I can't stress enough that you do not want to overtrade these suggestions. The position size I suggest is based on a $100,000 portfolio, so adjust accordingly.
The market continues to try and gain some footing.
The S & P 500 managed to close 2.94 points higher. It ended the day closing at 2,907.97.
And the high for the day was 2,909.51 or within 1.10 points of the minor level, we have been monitoring.
But, once again, the S & P 500 could not close above 2,910.15. Yesterday was the sixth day that the S & P 500 traded above and below 2,910.15.
We know a move will happen. The question is when? And in what direction? Will we confirm to the upside or will the market break?
As for as when the move should begin, I do believe we got our warning yesterday when both the S & P 500 and the VIX closed to the upside. This is a divergence and puts us on alert that a move is forthcoming.
I look at the market in short term four-day cycles. And as I said above, yesterday was the sixth day that the market was trading around the minor 2,910.15 level. The 8 days cycle would end tomorrow. If the market does not move then, the next 4-day cycle would end next Tuesday.
As for direction, I have to still be biased to the upside. This is even with the VIX down to long term support and our sentiment indicators starting to reach overbought levels.
The bullish bias emanates from the fact that the short term charts are still very bullish.
And as I said yesterday, the daily chart is getting very close to crossing into an uptrend.
So, even if the market does pull back, I would expect a short term pullback and a rally after the market finds support.
And with technical support down as low as 2,840, the S & P 500 could drop 70 points without the uptrend being affected.
The daily price bar closed at 88% of the range yesterday. This suggests that the odds of violating yesterday's high before the low is almost 90%.
And the support area from yesterday is in the 2,903 area.
Pre open, the S & P 500 is trading about 3 points lower. This would project to an open just above the 2,903 support area. Watch this level this morning to see if it holds.
Earnings begin to heat up this week. Tomorrow, we will get earnings from BA.
And tomorrow afternoon, we will hear from FB, CMG, TSLA, and MSFT.
Also, tomorrow is our webinar.
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 12.42. We were looking for resistance at the 13.28 level and yesterday's high came to 13.26 before the VIX sold off to close under the major 12.50 level.
As I have said before, we would need a move up in the VIX to signal a turn in the market.
And at the minimum, I would expect a close above 13.28 before that can happen. And preferably two closes above 13.28.
But, at this point, the VIX cannot do that. So, we are still biased to the upside in the market.
12.89 is minor resistance, as well as 13.28.
On the downside, 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. And it is starting to look like the market will not be able to. But, as I said above, the VIX needs to move above 13.28 before a serious pullback will occur.
Short term support is at the minor 2,902.80 level. This should be tested at the open. 2.903 is also where technical support exists for the S & P 500.
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 closed out last week at 187.92. Yesterday was the first close above the major 187.50 level.
The next minor level on the upside is 189.06. Two closes above 189.06 and the QQQ should test 193.75.
188.28 is a minor resistance level on the upside. If the QQQ clears this level, it should head higher.
Like the S & P 500, both short term charts are bullish. And like the S & P 500, the QQQ is very close to crossing into an uptrend on its daily chart.
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 155.23. 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 is now back to closing just under the midband.
If the IWM can clear 156.24, it should head higher. Watch this level today as it should now be minor resistance.
Minor support is at 153.13. And at 154.69.
Both short term charts are bullish. And technical support is around 154.
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 122.31. Watch the 122.27 level. If it can hold as support, the TLT could bounce higher.
If the TLT drops to the 121.88 level, I would expect strong support there.
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 **
Major level: 120.31<
Minor level: 119.92
Minor level: 119.14
Major level: 118.75 <
The GLD closed at 120.37. Biased for a drop to 118.75.
And I would expect resistance at 121.09 and at 121.88.
Both the 30 minute and 60 minute charts remain bearish.
Technical resistance is still around 121.
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 68.61. The XLE came within 10 cents of the 68.75 level.
At this point, the key technical set up is that the XLE is trading just under the midband on the daily chart. The midband is 68.79 and yesterday's high came within 18 cents of it.
Watch to see if the XLE can clear the midband. If it can, I would expect the XLE to continue higher.
Short term charts remain bullish. Technical support is at 67.70.
I would expect strong support at the 65.63 level.
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 85.16. Short term support is at 84.96. A break under this level and the FXY should continue to drop.
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.
Short term charts are bearish. Technical resistance is at 85.70.
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 204.53. I am biased for a move up to 206.25. However, short term resistance is at 204.69. Apple will need to clear this level to move up to 206.25. And Apple cleared 204.69.
Support is at 203.13 and 201.56.
Short term charts remain bullish. Technical support is also around 200.
WATCH LIST:
Bullish Stocks: AVGO, COST, MA, ZBRA, SHOP, MMM, CP, MCD, CME, DE, CMI, ADP, V, VRSK, XLNX, DIS, KLAC, DG, MSFT, RCL, PRU, MAN, ETN
Bearish Stocks: NFLX, HUM, BDX, CI, ALNY, SQ, COP, OXY, WSM, GRUB, HLF, EAT, JWN, SIG, CLVS, GES
Be sure to check earnings release dates.