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
Total Premium Collected $1.95
ASNA Long at $14.20
Total Premium Collected $0.75
DUST Long $4.50
Total Premium Collected $0.70
SNAP Long at $14.54
Total Premium Collected - $1.65
OI Long Feb $19 call @ $1.70
MDR Long @ $9.31
PHM Long Dec $25.50 put @ $0.80
PHM Short Dec $24.00 put @ ($0.35)
FB Long Dec 28th - $144 Call @ $2.48
FB Short Dec 28th - $147 Call @ $1.21
.........................................................................................
The selling continued yesterday, with the market down to the 2,548.80 level. So, this puts the S & P 500 within 50 points of the major 2,500 level.
This also puts the S & P 500 right at the lower extreme bollinger band on its daily chart. The lower band is 2,532.80. And yesterday's low of 2,530.54 breached the lower band by about 2 points.
Yesterday, I suggested a short term long debit spread on Facebook based on the fact that the market is down to long term support and I do expect a bounce.
Pre open, the S & P 500 is set to open about 10 points higher. So, perhaps with the Fed beginning their two-day meeting today, this could calm the markets down.
Yesterday, the S & P 500 closed at 22% of the daily bar. This still puts the odds of violating the low before the high at around 80%.
And with the bearish nature of yesterday's daily bar, I would expect resistance in the 2,565 to 2,568 area.
The range yesterday was 70.59 points and the daily average true range is 52.25. So, yesterday's range was 135% of the average. Any range exceeding the average is considered bearish.
Yesterday also showed some capitulation. The down to up volume was 6.67. This is not quite the level I consider a selling climax, but it does mean that selling volume is picking up.
I wanted to update all the major markets and where they are in relationship to their lower bands.
The IWM is also right at its lower band. The lower band is 137.27 and it closed at 137.02. This puts it 20 cents under the lower band.
The DOW is almost at its lower band. That level is 23,270.85. And yesterday, the DOW closed at 23,592.98. So, it is still about 200 points above the lower band.
And the NASD Composite closed at 6,753.73. The lower band is 6,555.36. So, like the DOW, the NASD Composite is about 200 points above the lower band.
All daily charts for the major markets have moved into downtrends.
The extreme bands do measure that markets are at extreme conditions. And as I said yesterday, when price breaches the lower band and rallies, it will typically retest the lower band again. If the retest holds above the lower band, this usually signals that the downtrend is over.
Perhaps I will show this set up on tomorrow's webinar, so you can see the typical pattern.
The focus for the next two days will be on the Fed. Testimony begins today and tomorrow at 2:00, we will get the announcement from the Fed on interest rates.
The weekly resistance area of 2,615.41 to 2,634.34 should still be valid on a rally.
Continue to monitor the levels as I mentioned above.
Here are the Key Levels for the Markets:
$VIX:
Major level: 31.25
Minor level: 29.69
Minor level: 26.56
Major level: 25.00
Minor level: 23.44
Minor level: 20.31 **
Major level: 18.75 <
Minor level: 17.19 **
Minor level: 14.06
Major level: 12.50
The VIX closed at 24.32. Yesterday's high did take out the 25 level. It peaked at 25.88.
Watch to see if the VIX can clear 25 today. If it can, it could run up to 28.13. But, I would expect strong resistance at 28.13.
23.44 should be support on the downside.
SPX:
Minor level: 2,707.50
Major level: 2,695.30
Minor level: 2,683.10
Minor level: 2,658.70
Major level: 2,646.50
Minor level: 2,634.30
Minor level: 2,609.90
Major level: 2,597.70
Minor level: 2,585.48
Minor level: 2,561.03
Major level: 2,548.80 << Hit
Minor level: 2,546.60
Minor level: 2,512.20
Major level: 2,500.00
After hitting the major 2,597.70 level in one day, the S & P 500 has now dropped another level to 2,548.80.
Since the top on December 3rd, the S & P 500 has now dropped 5 levels.
The S & P 500 is oversold. We know that because it is right at the lower band on the daily chart.
And it is now within 50 points of the 2,500 level.
At this point, to move higher, the S & P 500 will need two closes above 2,561.03.
If the S & P 500 can hold the 2,548.80 level, there could be a sharp bounce.
QQQ:
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
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
Minor level: 154.69
Minor level: 151.56
Major level: 150.00
The QQQ closed at 157.43. It closed down 3.65. It broke under the major 157.81 level.
The QQQ is now one level away from the 150 level.
At this point, 162.50 and 159.38 should be resistance. If the QQQ can hold 156.25, we may see a bounce here.
IWM:
Minor level: 151.56
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
Minor level: 142.19
Minor level: 139.06
Major level: 137.50 <
Minor level: 135.94
Minor level: 132.81
Major level: 131.25
The IWM closed at 137.02. It closed down 3.12 on the day.
140.63 is minor resistance. And watch the minor 134.38 level on the downside. A break under 134.38 and the IWM should continue lower.
The most oversold of all the major markets.
The lower band on the daily chart is 137.26 and the IWM closed just under it.
TLT:
Major level: 121.88
Minor level: 121.49
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75
Minor level: 118.36 **
Minor level: 117.58
Major level: 117.19
Minor level: 116.80
Minor level: 116.02
The TLT closed at 119.17. A close today above 119.14 and the TLT should test 120.31.
118.75 should be major support. And I would expect some resistance at the 120.31 level.
GLD:
Major level: 121.88
Minor level: 121.10
Minor level: 119.53
Major level: 118.75 <
Minor level: 117.97 **
Minor level: 116.41
Major level: 115.63 <
Minor level: 114.85
Minor level: 113.28
Major level: 112.50
The GLD closed at 117.87. Target should now be up to 118.75.
117.19 should be minor support.
XLE:
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
Minor level: 58.60
Minor level: 57.03
Major level: 56.25
The XLE is another market sitting at its lower band on the daily chart. The lower band is 60.84 and it closed at 60.96.
59.38 is a key level for the XLE. Two closes under 59.38 and the XLE could drop as low as 50. But, it is sitting on support at the lower band now.
The XLE is oversold.
FXY:
Major level: 85.94
Minor level: 85.75
Minor level: 85.36
Major level: 85.16
Minor level: 84.97
Minor level: 84.58 **
Major level: 84.38 <
Minor level: 84.18
Minor level: 83.79
Major level: 83.59
The FXY closed at 84.73. It closed up 0.47 on the day. And it looks like it is getting the bounce we expected.
A close today above 84.58 would imply a move up to 85.16.
The FXY is oversold and I do expect a bounce. If the FXY can move above 84.38, it should bounce.
The FXY will have to hit 85.94 on this drive for the downtrend to be over.
AAPL:
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
Minor level: 164.06
Major level: 162.50 <
Apple closed at 163.94 yesterday. It closed down 1.54 on the day.
The 162.50 level is a key level for Apple. At this point, I would expect support at this level and yesterday's low came within 23 of it.
If Apple can hold 162.50, I would expect a bounce.
Short term is oversold.
WATCH LIST:
Bullish Stocks: TSLA, PANW, CRM, CASY, DATA, KMB, CTXS, HSY, YUM, AZPN, GDOT, D, GRMN, LNG, CIEN
Bearish Stocks: CHTR, SPY, DIA, FDX, FLT, STZ, GS, WEX, LH, HON, UTX, CXO, RACE, JPM, FANG, DGX, ALL, ABC
Be sure to check earnings release dates.