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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AMC Long at $15.27
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Short Dec $15.50 call @ $.30
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Yesterday closed the month of November with another bullish close. For the month, the S & P 500 was up 72.32 points to close at 2,647.58.
As a reader of this daily update, you no doubt recognize that this means that the next level was achieved. The level we were looking for was 2.656.30.
Quite frankly, it does not shock me that the market has moved up to 2,656.30, but what is shocking how quickly we have moved up to that level after breaking through the 2,578.10 level.
Based on the bullish price bar for November, support from the monthly bar should be in the 2,607 area.
And price is still well above the upper band on the monthly chart.
The upper band is now 2,460. So yesterday's close was about 187 points above the upper band.
At some point, the market will come back inside the extreme upper band. But, shorting is still not the route to go.
So, when should you dabble on the short side?
At this point, the S & P 500 has had 8 consecutive higher monthly closes.
This is clearly overextended.
But, the market could close higher for two more months. This would put a potential short in January or February.
10 consecutive higher closes would be a rare event. And if this does happen, dabbling on the short side could be considered.
But, I would not just trade short. I would consider a straddle or strangle position.
I have mentioned this strategy a few times on various markets when they have reached critical price levels, and I believe those trades would have worked out in each situation.
With no overhead resistance, the market could go vertical, so you want to be positioned on both sides.
Seems odd to be mentioning shorting now, but it does to look ahead a bit.
Especially when we the VIX and the S & P 500 diverged again.
Continue to follow the resistance levels.
Here are the Key Levels for the Markets:
$VIX:
Major level: 14.06
Minor level: 13.67
Minor level: 12.89
Major level: 12.50
Minor level: 12.11
Minor level: 11.33 **
Major level: 10.94 <
Minor level: 10.55
Minor level: 10.16
Major level: 9.38
Minor level: 8.99
Minor level: 8.20
Major level: 7.81
The VIX and the S & P diverged again. The VIX closed at 11.28, up .58 on the day, while the S & P 500 closed to upside as well.
A retest of 12.50 seems likely at this point. And I still expect resistance at that level.
$SPX:
Major level: 2,656.30 HIT!
Minor level: 2,646.53
Minor level: 2,626.98 **
Major level: 2,617.20 <
Minor level: 2,607.43
Minor level: 2,587.88
Major level: 2,578.10
Minor level: 2,568.35
Minor level: 2,548.85
Major level: 2,539.10
Minor level: 2,529.33
The S & P 500 hit the 2,656.30 level. The key at this point is to see if it can be cleared.
This does set up a scenario where strong support on a sell off should be at 2,500 and 2,578.
A short time ago, I mentioned that I felt this market could fo to 2,812. I may amend that to say it will go higher.
At this point, I will not reveal where I feel it could go, because it depends upon 2,656 being taken out.
QQQ:
Major level: 162.50
Minor level: 160.94
Minor level: 157.81 **
Major level: 156.25 < Hit
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
Minor level: 150.78
Major level: 150.00
The QQQ closed at 155.15. Look for a retest of 156.25.
Minor support is at 154.69.
IWM:
Major level: 153.13 **
Minor level: 152.35
Minor level: 150.78 <
Major level: 150.00
Minor level: 149.22
Minor level: 147.66
Major level: 146.88
Minor level: 145.32
Minor level: 144.53
The IWM closed at 153.65. The IWM is trading above the upper band on the daily chart. Overbought short term.
153.13 should be minor support.
TLT:
Major level: 128.13
Minor level: 127.35
Minor level: 125.78 **
Major level: 125.00 <
Minor level: 124.61
Minor level: 123.83
Major level: 123.44
Minor level: 123.05
The TLT closed at 125.12. The major 125 level should be support. The TLT did trade below 125, but recovered.
From yesterday, I said ... "I don't see the TLT falling under 124.22, but if it does, expect it to drop lower."
The low for the day was 124.44 before recovering.
GLD:
Minor level: 125.78
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88 < <
Minor level: 121.10 ***
Minor level: 119.53
Major level: 118.75
The GLD closed at 121.10. A close today under 121.88 would indicate a further drop.
Minor resistance is at 121.48.
XLE:
Major level: 73.44
Minor level: 72.66
Minor level: 71.09
Major level: 70.31
Minor level: 69.92
Minor level: 69.14 **
Major level: 68.75 <
Minor level: 68.36
Minor level: 67.58
Major level: 67.19
The XLE closed at 69.10, just 4 cents under the 69.14 minor level.
Next level on the upside is 69.14. Two closes above 69.14 and the XLE should test 70.31.
69.53 could offer minor resistance. And minor support is at 68.75.
FXY:
Major level: 86.72
Minor level: 86.53
Minor level: 86.14
Major level: 85.94
Minor level: 85.75 <
Minor level: 85.36
Major level: 85.16 **
Minor level: 84.96
Minor level: 84.55
Major level: 84.38
The FXY sold off and closed at 84.88. I moved under the 85.16 support level.
84.77 is a minor support level. A break under it and the fXy head lower. And a retest of 84.38 would be likely.
AAPL:
Major levels for Apple are 175, 171.88, 165.63, 162.50, 159.38, and 156.25.
Apple bounced and closed at 171.85, only 3 cents under the 171.88 level. If Apple can clear 171.88, I would expect a retest of 175.
Watch to see if Apple can clear the 172 area.
WATCH LIST:
Bullish Stocks: NTES, AVGO, BA, SPY, BDX, STZ, ILMN, WYNN, ACN, DE, MA, CLX, RHT, WDAY, CBOE, LULU, VTR, CCL
Bearish Stocks: GS, MLM, AYI, TSRO, WAB, AIG, PZZA, WIX, PAG, OTEX, TBT, EPD, AR
Be sure to check earnings release dates
