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.
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FB Short April 12th - $167.50 Put for $0.58
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So, since taking out the major objective we had of 2,890.60, the market action was rather modest yesterday.
The DOW took the big hit with the selloff in BA. But, I don't find this unusual, bad news or not.
If you notice, the market tends to pause or even pullback after clearing a major level.
And with the VIX down to major long term support, this would certainly not be a shock to see profit-taking.
The market gapped down at the open and dropped to a low of 2,880.78 before finding support and rallying to close 3.03 points higher on the day. The S & P closed at 2,895.77.
The daily range was only 15.17 points. Yesterday was now the eighth consecutive day of contractions.
The average daily range now reads 24.74 points.
But, for the day, the S & P 500 did close at 99% of the daily range, This still puts the odds of violating yesterday's high before the low.
And both the S & P 500 and the VIX closed to the upside. This is now the second day in less than a week where the VIX and the S & P 500 diverged.
This also puts us on alert that profit taking could happen.
But, with both the 30 minute and 60 minute charts in uptrends, I would certainly expect a rally if the market does sell off. In fact, a pullback would still be an opportunity to go long.
The support area from yesterday's daily bar is in the 2,888 to 2,892 range.
Earnings are slow this week as we wind down to the end of this quarter. Earnings should pick up the week of April 15th.
On Friday morning, we will hear from a few of the major banks. Wells Fargo, PNC, and JP Morgan all report before the open.
On another note, I do want to remind that the list of corporate buybacks is posted in the members' area. The buybacks for March should be posted in a day or two.
Corporate buybacks are definitely slowing down. For March, there were only 7 buybacks announced. This was after the 15th in February and the 21st in January.
As a comparison, there were 35 buybacks announced last February. And 22 announcements last March.
This is a trend I will continue to watch.
Finally, tomorrow is our webinar. If there is anything you would like me to show, please email me directly at davismdt@gmail.com and I will be happy to add it to the agenda.
Pre open, the S & P 500 is trading 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 13.18, up 0.36 points for the day. At this point, the VIX will need two closes above 13.28 to move up to 15.63.
But, at this point, 13.28 should be resistance.
And for the day, the VIX closed at 12.82.
At this point, 13.28 should be resistance. And to drop to 9.38, the VIX will need two closes under 11.72.
14.06 is also minor resistance.
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
At this point, 2,905.30 is a resistance level. If the S & P 500 can clear 2,905.30, look for it to continue higher.
Both the 30 and 60 minute charts continue to be bullish. 2,862 is technical support.
2,880.90 is minor 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 185.13. The upside target is still to 187.50. And the QQQ is now within 2 points of it.
Support should be at 181.25. 184.38 should now be a minor support level. And if the QQQ can clear 185.94, look for it to move higher.
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 157.12. The IWM is now just above the midband on the daily chart which is 156.09. Watch for this level to hold as support. If it can't, look for it to drop.
At this point, the S & P 500 will need two closes above 157.81 to move higher. And 154.69 should be support.
156.26 is a minor support level. And the 155 area should offer technical support.
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 123.59. Biased for a retest of 125.
If the TLT does break under 123.44, I would expect support at 121.88. Short term support, however, is at 123.44.
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 122.51. The GLD cleared the major 121.88 level. Look for this to be support.
If the GLD can clear 122.66, look for it to head higher.
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 67.91. Still, expect a move up to 68.75.
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.
Yesterday's high was 68.25 which puts it just below the midband. You know the implications when a market trades around the midband, so I will not repeat it.
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 85.54. 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.
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 200.10. Objective of 200 hit! If Apple can clear 200, look for a move up to 206.
198.44 should be support. Technical support is around 198 as well.
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.