While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to 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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APA Long Oct $47.50 Call at $3.45
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Before I begin today, I do want to thank everyone who emailed and wished my wife well. I truly appreciate it.
We are fortunate in that the car bore more of the brunt of the accident than my wife. Though as a precaution, she was checked out at our local hospital and thankfully there was no major damage. She will continue to be sore for a few days, but at least there will not be any permanent damage.
Last week ended with the S & P 500 closing at 2,425.55, down 15.77 for the week. This was the second consecutive lower close for the markets.
This was also the second day where the S & P 500 closed under the major 2,437.50 level. The next level under that major level is 2,421.88 and Friday's close was about 4 points above it.
2,421.88 is critical at the moment because if the market has two closes under that level, then the downside objective is 2,375.
The other level to be aware of is 2,406.25. This is a major support level that could impact the market as well.
At this point, the S & P 500 could drop to 2,375 and the uptrend would still be intact. In fact, it could fall to 2,360 and that would not alter my view either.
As for the weekly price bar, resistance would now be in the 2,440 to 2,448 area.
In scoping down to the shorter term charts for the S & P 500, the 60 minute chart is still in an uptrend, though it is very close to crossing into a downtrend. The lower band is 2,404, which is very close to the major 2,406 level I mentioned.
The 30 minute chart is firmly in a downtrend. I made a few comments last week about the short term 30 minute chart. The first was that price was under the lower band. Based on that formation, we would expect the midband to offer resistance.
On Wednesday, price got just above the midband and broke back under it.
We also had a situation where price was under the lower band on the 30 minute chart back on the 10th and the 11th. This tells us that there is a very high probability that the lower band would be revisited.
I bring this up because after the midband failed to hold as support, the S & P 500 dropped back to under the lower band on Friday.
This tells us two things. The first is that the market is oversold in the short term and a bounce would be expected. And the second is that price should retest the lower band after a rally.
The lower band is now 2,431. If the S & P 500 can close above that level, it should begin a short term bounce.
Earnings continue this week, though the number of companies reporting are slowing down as we get towards the end of this season.
Continue to follow the resistance levels.
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: 14.84
Minor level: 13.28
Major level: 12.50
Minor level: 11.72
Minor level: 10.16 **
Major level: 9.38 <
The VIX closed at 14.26, just above the 14.06 level. At this point, a close above 13.28 and the VIX should test 15.63.
And 12.50 should offer support.
$SPX:
Major level: 2,500.00
Minor level: 2,484.38
Minor level: 2,453.12 **
Major level: 2,437.50 <
Minor level: 2,421.88
Minor level: 2,390.62
Major level: 2,375.00
Minor level: 2,359.38
Minor level: 2,328.12
Major level: 2,312.50
Since failing to achieve the 2,500 level, the S & P 500 was dropped 70 points.
With a close Friday at 2,425.55, the key in the short term will be if the S & P 500 can hold the 2,421.88 level. Two closes under that level and it should test 2,375.
QQQ:
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75 <
Minor level: 142.18
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81
The QQQ closed at 141.23. It has closed under 142.18 for two days, so the objective should be to 137.50.
143.75 should be a key level. A failure to get through this level and the QQQ could drop sharply.
IWM:
Minor level: 144.53
Major level: 143.75
Minor level: 142.97
Minor level: 141.41
Major level: 140.63
Minor level: 139.85
Minor level: 138.28 **
Major level: 137.50 <
Minor level: 136.72
Minor level: 135.15
Major level: 134.37
The IWM dropped under 134.38, but closed just above it, at 134.92.
This is a key level because if the IWM has two closes under 134.38, it could drop to 125. 137.50 should be resistance.
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
The TLT closed just above 126.56, at 126.62 on Friday. To move higher, the TLT will need two closes above 126.56. Watch the minor 126.17 level on the downside.
125 should be major support.
GLD:
Major level: 125.00
Minor level: 124.22
Minor level: 122.66 **
Major level: 121.88 <<
Minor level: 120.32
Minor level: 119.53
Major level: 118.75
Minor level: 117.97
The GLD closed above 121.88. It closed at 122.30 on Friday.
124.22 should offer resistance. And 118.75 should be minor support.
XLE:
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 took out the 62.50 objective. It closed Friday at 62.32.
62.11 is the key minor level. Two closes under that level and I would expect the XLE to drop to 60.
FXY:
Major level: 89.06
Minor level: 88.67
Minor level: 87.89
Major level: 87.50 <
Minor level: 87.11 ***
Minor level: 86.33
Major level: 85.94
Minor level: 85.55
Minor level: 84.77
Major level: 84.38
The FXY closed at 88.09 onf Friday. A close today above 88.67 and the FXY should test 89.
87.50 should be support.
AAPL:
Major levels for Apple are 162.50, 159.38, 156.25, 153.13, and 150.
I don't see Apple dropping below 153. That level should offer strong support. Also, the 156.25 level should offer support.
WATCH LIST:
Bullish Stocks: STMP, STZ, ANET, BABA, COST, ADBE, SBAC, AMT,
MA, CLX, WEN, TAL, CNP
Bearish Stocks: AYI, GWW, SNA, FFIV, BWLD, CSO, AAP, CLB, EOG, GPC, RS, MMP, SLB
Be sure to check earnings release dates.
