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
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DUST Long $4.50
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RRC Long at $9.20
RIG Long at $8.81
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FEYE Long at $17.18
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CHKP Long August 16th - $110 call for $2.70
CHKP Short August 16th - $115 call for $0.60
DLTR Long August 16th - $102 call for $2.35
DLTR Short August 16th - $107 call for $0.40
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I suggested a debit spread on DLTR yesterday before the tweet that wreaked havoc on the markets.
The reality is we were looking for some impetus that would cause a marketwide selloff. And it is certainly appearing that the trade wars are that impetus. It seems to be more evident that this will be a protracted negotiation and a resolution is not in the immediate horizon.
But, once again the VIX forewarned us to a shift in market sentiment. And that was when it got down to its long term support level of 12.50.
Since breaking under 12.50 on July 25th, the VIX is now at 17.87.
The VIX has jumped over 50% since the bottom. The question is how high will it go?
At this point, a move to 18.75 should be expected. And 20.31 should be minor resistance. So, if the VIX does clear 20.31, I would expect it to continue higher. This is a key level to watch in the short term.
As for the S & P 500, it got as high as 3,013.59 before the storm hit and drove the market down to a low of 2,945.23.
The range for the day ended up being 68.36 points. This was 250% greater than the daily average true range of 27.10 points.
Certainly a very bearish scenario.
And the midpoint of yesterday's bar which was 2,979.41 should be strong resistance.
The daily bar closed at 12%, which suggests that a violation of yesterday's low is highly probable.
And speaking of close percentage, I do want to point out that Wednesday's close percentage was 38%. This did suggest that Wednesday's low would be violated before the high.
And yesterday's high went to about 4 points under Wednesday's high before the selloff, which did produce a lower low.
As it is shaping up, the weekly bar is a strong bearish bar.
The range for the week, so far is 80.38 points. This is greater than the weekly average true range, which is 69.61 points.
The midpoint so far is 2,985.42 or about 32 points higher than yesterday's close.
Pre open, the S & P 500 is trading about 11 points lower before the open. If the market opens at this level, it will satisfy the close percentage right at the open. In other words, the market will open below yesterday's low.
I do want to point out that the S & P 500 is still above the upper band on the monthly chart. But, watch this level, which is 2,942.51.
Here are the Key Levels for the Markets:
$VIX:
Major level: 21.88
Minor level: 21.10
Minor level: 19.53
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
The VIX closed at 17.87 yesterday. The VIX did take out the 18.75 level. It went to a high of 19.46.
As I mentioned above, watch to see if the VIX clears the 20.31 level.
The key for the VIX is if it clears the 18.75 level and runs to 21.88. This would signal more pain for the markets.
SPX:
Minor level: 3,164.08
Major level: 3,125.00 <
Minor level: 3,085.95
Minor level: 3,007.85 ***
Major level: 2,968.80 <<
Minor level: 2,929.73 **
Minor level: 2,851.58
Major level: 2,812.50
Minor level: 2,773.45
Minor level: 2,695.35
Major level: 2,656.30
The S & P broke under the 2,968.80 level and closed at 2,953.56. The next level on the downside is 2,929.73. Two closes under this level suggests a drop to 2,812.50.
Short term support is 2,944.30. Daily trend is still bullish.
QQQ:
Major level: 196.88
Minor level: 196.10
Minor level: 194.53 **
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
The QQQ closed at 190.15. At this point, the QQQ should drop to 187.50. But, it is oversold in the short term.
And there is also strong support right at 190.63. A break under this level and the QQQ should head lower.
IWM:
Major level: 162.50
Minor level: 160.94
Minor level: 157.81 **
Major level: 156.25 <
Minor level: 154.69
Minor level: 151.56
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
The IWM closed at 154.29. A close under 154.69 and the IWM should drop to 150.
I do expect support at 150.
TLT:
Major level: 137.50
Minor level: 136.72
Minor level: 135.16 **
Major level: 134.38
Minor level: 133.60
Minor level: 132.03
Major level: 131.25
Minor level: 130.47 **
Minor level: 128.91
Major level: 128.13
Minor level: 127.74
Minor level: 126.95
The TLT closed at 135.26. The TLT took out 134.38 as expected. At this point, a close above 135.16 suggests a move up to 137.50.
And 137.29 is the upper band on the daily chart. You know the implications of that.
GLD:
Major level: 137.50
Minor level: 136.72
Minor level: 135.16 **
Major level: 134.48 <
Minor level: 133.60 **
Minor level: 132.03
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13
Minor level: 127.74
Minor level: 126.95
The GLD closed at 136.41. 137.50 is the objective. Adn the upper band is 136.73.
135.16 should be support.
XLE:
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
Minor level: 58.60
Minor level: 57.03
Major level: 56.25
The XLE closed at 61.28. With a break under 62.50, look for a move lower.
60.94 is short term support. This is a key level because if the XLE has two closes under this level, it could drop to 56.
AAPL:
Major level: 212.50 <
Minor level: 209.38
Minor level: 203.13 **
Major level: 200.00 <
Minor level: 196.88
Minor level: 190.63
Major level: 187.50
Minor level: 184.38
Minor level: 178.13
Major level: 175.00
Apple closed at 208.43 after reporting. A close today under 209.38 and Apple should drop to 200.
Apple has dropped about $11 after closing back inside the upper band on the 10 minute chart.
206.25 should offer minor support.
WATCH LIST:
Bullish Stocks: CMG, SHOP, AVGO, MA, PANW, OLED, PANW, HD, LRCX, BABA, V, CMI, DE, CB, JPM
Bearish Stocks: ALGN, AMGN, IRBT, SFLY, XEC, CLR, NOAH, SFM, CADE
Be sure to check earnings release dates.
