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
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RRC Long at $11.85
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AMC Long at $16.16
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CNC Long June $50 call for $2.85
CNC Short June $55 call for $1.25
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Yesterday saw some major divergences in the major markets. The S & P 500 closed slightly lower at 2,926.17. For the day, it was down 1.08.
But, the market got to as low as 2,912.84 before rallying into the close.
The daily range was 20.26 which was almost equal to the daily average true range of 20.36.
The DOW, however, closed to the downside about 135 points. But, at its low, it was down another 150 points from the close.
The loss in the DOW was primarily attributed to the 13% drop in MMM off their earnings.
The NASD closed higher. The earnings move on Facebook, which was a move of $10.68, no doubt helped to move that market higher.
For the day, the S & P 500 ended up closing at 66% of the daily bar. This does suggest that the odds favor taking out yesterday's high below the low.
The support area from yesterday is in the 2,923 to 2,927 area.
In taking a look at the weekly price bar forming, we see that it is forming a bullish bar.
The midpoint so far is 2,916.59. Watch this level on a pullback as I would expect it to be support. The weekly high so far is 2,936.83.
And a close closer to the high would also suggest the market should continue higher.
The high is only 30 points away from our upside objective.
As I said, this is a very key level for the market. And it should tell us a lot about what will happen to the market in the coming months.
There is one other factor to look at to help us determine if the market will reverse lower. And that is the down to up volume.
I have not mentioned this in a while. That is because I primarily use it to measure selling climaxes. A reading of over 9 to 1 usually signals a selling climax and can indicate that a market should turn up.
Tops can be a bit different. For example, on the day of the all-time high, the down to up volume was 0.79. The next day it read 2.56. Two days later, there was a reading of 2.50.
At the recent top, the reading was only 1.45. And yesterday, it was 1.93. For the market to turn down, I would expect a reading over 2.50.
This has not happened at this point. But, it is something I do monitor as well.
As a comparison, when the S & P 500 topped on January 26, 2018 at 2,872.87, the down to up volume reading was only .41.
The next day, it registered 3.20. And the day after that, there was a reading of 4.95.
The take away is that at market tops, the down to up volume should make a jump to signal that a turn is coming.
By the way, it is a lot easier to use the down to up volume to indicate a bottom is in. This is because you just look for a reading of greater than 9 to 1.
When the market bottomed back in March of 2018, there was a day that read 30.91. That may have been the highest reading I ever saw.
The market did not bottom that day. In fact, three days later, there was a reading of 11.46. The next day was when the market bottomed.
How do I know this information? Because I have tracked the daily prices for the S & P 500 and the VIX going back to July of 2012.
Anyway, this is just another factor to look at to gain an edge in the market.
AMZN reported last night and is up almost $17.
And MMM is down about 9% pre-open, which is dragging the DOW down.
But pre open, the S & P 500 is down slightly.
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 13.25. The VIX did get to a high of 14.30 before closing under the 13.28 level.
But, as I have been saying, 13.28 should be resistance and for the VIX to move higher, it will need two closes above it.
And so far, this has not happened.
12.89 is a minor level on the downside. If the VIX breaks under this level, it should continue lower. Yesterday's low came to 12.81 or under this level before closing just under 13.28.
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 upside objective is still to 2,968.80. And at this point, the minor 2,910.15 level should offer support.
Yesterday formed a doji bar. Watch the close of 2,926.17 as a balance point.
Also, watch the high of 2,933.10 or the low of 2,912.84 for a violation.
Continue to buy against support. Technical support is around 2,916.
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 190.48. The next objective for the QQQ should be to 193.75.
189.06 should be short term support. And 189.84 is minor support as well.
Technical support is around 188.60.
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 156.75. The IWM will still need two closes above 157.81 to move higher.
Support should now be at the midband, which is 156.29.
Minor support is at 155.47 and 156.25.
Both short term charts are bullish. And technical support is around 156.
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 123.39. We had been looking for a bounce to 125 and the TLT is complying with us.
123.24 is minor support. Watch to see if the TLT can clear 123.93. If it can, it should move higher.
Technical support is at 123.
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 120.57. If the GLD can hold 120.31, I would expect a bounce.
A break under 119.53 and the GLD should head lower.
And I would expect resistance at 121.88.
Both the 30 minute and 60 minute charts remain bearish.
Technical resistance is still around 121.70.
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 67.09. A test of 65.63 is possible now. But, I would expect strong support at 65.63. A break under 66.80 would confirm that the XLE should head lower.
The XLE sold off the midband on the daily chart. That level is 68.77.
Short term charts remain bullish. Technical support is at 65.48. If the XLE cannot reclaim 67.26, I would expect a drop to 65.48.
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 85.39. Looking for a bounce from its oversold condition.
And a close today above 85.36 would indicate the FXY should move higher.
85.25 should offer minor support.
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 205.28. Next minor level is 207.81. Two closes above 207.81 and Apple should test 212.50.
On the downside, the support level should be 204.69.
Short term charts remain bullish. And technical support is also around 205.
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.
