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
CNC Long June $50 call for $2.85
CNC Short June $55 call for $1.25
.........................................................................................
I suggested booking a quick profit on the short term call position on DAL yesterday. The overnight return was just under 50%.
In addition, I suggested you close the short $22.50 call on CLW. You should still be long the $20 call if you followed the original alert.
The final suggestion yesterday was a debit spread on CNC. We went out two months on that trade to the June options.
The market finally broke out of the trading range it has been in for about two weeks. As you know, the market had been trading around the minor 2,910.15 level for seven days.
And now it finally pushed up to close above 2,910.15 for the first time. And it closed strongly above this level.
For the day, the S & P 500 closed at 2,933.68 or about 24 points above the minor confirming level.
And for the day, the S & P 500 closed at 91% of the daily bar. This tells us that the odds to take out yesterday's high before the low is almost 90%.
The range also expanded. The range for the day was 27.78 points. And it exceeded the daily average true range for the first time in about three weeks.
The daily average true range increased slightly to 21.11 points.
But, with a close about 24 points above the 2,910 confirming level, it would appear highly likely that we will get the second close above this level today.
This would suggest the upside objective for the S & P 500 will be to 2,968.80.
The theme I have been saying recently is that this market will not turn until we see a move up on the VIX to the upside confirming level for that instrument.
And until that happens, we need to continue to respect the uptrend.
The various sentiment indicators I track are reaching extreme overbought levels, but as I have said in the past, they are perfect when it comes to market timing. That is because markets can remain irrational.
What I find interesting is the number of market pundits discussing how overbought the market is and how ripe it is for a pullback.
When I hear this type of conversation, it further adds to the validity of the resistance levels I share.
We knew why the market was stalling. That is because it took out the major 2,890.60 and stalled at the next minor confirming line of 2,910.15.
As I said in prior updates, the market will often stall out at the next upside level after breaking through a major level. And it usually comes back to test the major level from the upside.
These are all patterns that happen around key resistance levels. This lets you craft a likely scenario for the market.
For example, on John's webinar last week, I stated the key level for the market at that time was the 2,910.15 level. And that if we have two closes above that level, the target becomes 2,968.80.
This again goes back to price expectations. It is one thing to have the market move as we expect. It is another when it doesn't. And I think that is very important as well.
On today's webinar, I will take a look at the longer term charts for the markets we track. We will take a look at the daily, weekly and monthly charts, along with the short term charts.
This afternoon, we will get a number of high profile earnings reports. This includes FB, CMG, TSLA, and MSFT. And they will be closely followed.
The support area from yesterday's daily bar is in the 2,922 area.
Pre open, the S & P 500 is relatively flat.
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 12.28. The VIX got only as high as 12.69 yesterday.
As long as the VIX stays under 12.50, the market should continue to push higher.
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. If the VIX breaks under 12.11, I would expect a drop to 10.94.
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
With the first close above 2,910.15 yesterday, a close today above that level and the S & P 500 should move up to 2,968.80.
2,924.80 is a short term support level. And 2,903.90 is also a short term support level. Look for a move up to 2,943.
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 yesterday at 190.31. Yesterday was the first close above the 189.06 level. A close today above it and the QQQ should test 193.75.
189.06 should be short term support.
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 157.57. 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 IWM closed firmly above the midband on the daily chart. That level is 156.26 and should now be support.
Minor support is at 156.64 and at 157.03.
Both short term charts are bullish. And technical support is around 156.50.
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 122.57. The TLT closed just above the 122.27 level. This now suggests a move up to 125.
122.46 is minor support. Watch to see if the TLT can clear 122.66. If it can, it should move higher.
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 120.12. Still biased for a drop to 118.75, but the daily midband is 119.18 and should be support.
If it is violated, look for the GLD to continue down.
And I would expect resistance at 121.09 and at 120.31.
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 < HIT!
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 68.50. The XLE did hit the 68.75 level we were looking for.
But, the XLE is literally sitting right under the midband on the daily chart. That price is 68.78 and yesterday's high came to 68.81.
Will it clear the midband?
My suspicion is that it will.
Short term charts remain bullish. Technical support is at 67.70.
I would expect strong support at the 65.63 level. And 68.16 is short term 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 85.25. Looking for a bounce from its oversold condition.
I am not so sure if you follow the FXY. Quite frankly, I don't and I share this at the request from a fellow member.
My thought is to stop tracking the FXY and add another stock or two. For example, I could add FB, which is heavily tracked.
If this appeals to you, please email me at davismdt@gmail.com and let me know what stocks would appeal to you to track.
AAPL:
Major level: 212.50
Minor level: 210.94
Minor level: 207.81
Major level: 206.25 < HIT
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
Apple closed at 207.48. Next minor level is 207.81. Two closes above 207.81 and Apple should test 212.50.
212.50 should be a difficult level to break on the first attempt. Short term support is at 204.69.
Short term charts remain bullish. Technical support is also around 202.
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.