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.
CURRENT POSITIONS:
GOGO Long at $19.93
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DYN Long at $12.55
Premium Collected $0.48
APA Long Oct $47.50 Call at $3.45
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Yesterday, the markets had the expected bounce from its oversold condition. The S & P 500 closed at 2,452.51, closing 24.14 points to the upside.
The market did not close above the minor 2,453.12 level. Actually, the high for the day was 2,454.77, so the market got above it by about 1.60 points.
As you know, that is the next upside confirming level.
But, the market was able to get above the 2,440 to 2,448 area, which is the resistance level from last week's weekly price bar.
And with the market dropping under the lower band on the 30 minute chart, a retest of that level should be expected. That level is now 2,420.24.
The typical pattern when price breaches the lower band is to retest the lower band and find support above that level, assuming it will head back up.
As I write this, the S & P 500 is down about 8.50 points pre open, which means it should open around 2,444. This is right in the middle of the resistance level I mentioned above.
If the market should rally after the open, watch the 2,448 level to see if it is cleared or it offers resistance. If it sells off against that level, it should test 2,440.
Again, watch to see if it is breached.
The 2,437.50 resistance level should offer support. And it is just under the 2,440 level, so this area should be a key level to watch.
The key to determining when the market should reverse and head up is the VIX. You want to see the VIX reverse to the downside. At this point, 12.50 should offer resistance and if it is retested and fails, the market should head up.
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 11.35, down 13.95% on the day. This rapid drop once again demonstrates how long profits on the VIX should be booked quickly.
If the VIX closed under 11.72 today, the objective would be back to 9.38.
I would expect 12.50 to offer resistance. 10.94 is a minor support level.
$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
The S & P 500 is back to the 2,453.12 level. It will need two closes above that level to confirm a move up to 2,500.
Minor levels are 2,445.30 and 2,437.50. I would expect support at 2,437, but if that does not hold, I would expect 2,429.70 to.
A close today above 2,445.30 would be bullish.
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 143.20. At this point, I would expect support to come in at 142.19.
Objective should be to 143.75. The Lower band on the 30 minute chart for the QQQ is 140.46. Like the S & P 500, the QQQ did break under the lower band on the 18th and 21st, so watch for this level.
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 closed at 136.29. A close today above 135.15 and the IWM should test 137.50.
135.16 should offer minor support and 136.72 could offer 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 will need two closes above 126.95 to move up to 128.13. It closed at 126.44, just under the major 126.56 level.
126.76 could offer minor resistance. And 126.17 should be minor 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 at 122.21. It will still need two closes above 122.66 to move up to 125.
121.88 should be minor support. If that does not hold, I would expect 121.48 to.
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
60.94 is a key short term level. Two closes under that level and the XLE could drop to 56.
Having said that, the XLE is oversold short term and a bounce could happen. However, the XLE will need to clear 62.50 for that to happen.
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 just above 87.50, at 87.76 yesterday. Watch to see if it holds the 87.11 level. A break and close under 87.11 and the FXY could drop to 86.
87.50 should be major support.
AAPL:
Major levels for Apple are 162.50, 159.38, 156.25, 153.13, and 150.
Apple continued higher after violating the high from Monday. This was the anticipated price move. 158.59 is minor support. Apple is strongly bullish on all timeframes. Buy against 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.
