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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You should have closed out the short term Facebook debit spread yesterday. I will look to get back in this trade if the market shows signs of firming up.
The S & P 500 managed to gap higher at the open yesterday by about 14 points. The market managed to run up to a high of 2,573.99 before failing and dropping to a low of 2,528.71.
So, the range for the day ended up being 45.28. This was a contraction and less than the daily average true range of 51.75.
It appeared as if we would get the bounce we have been looking for yesterday but after hitting the high, the market sold off and gave back the gains.
The low for the day was 2,528.71 before the market bounced and closed for the day at 2,546.16
The close is significant because it was the second close under 2,546.60. This now suggests that the S & P 500 should drop to 2,500.
So, the market is almost at the long term objective.
Today, we will find out if it should continue down to 2,500.
Pre open, the market is bouncing again and is trading about 11 points higher. This should put the open around 2,557 and above the 2,546.60 level.
Watch the 2,546.60 level today. I would suspect the market will retest it. The question is will it stay above it.
We know the implications if the market closes under it. A close above it would mean that the S & P 500 will still need two closes under it to confirm a drop to 2,500.
As I have pointed out before, the S & P 500 is now sitting right on the lower band on its daily chart. That level is 2,530.45. And yesterday's low dropped about 2 points below it.
This level measures an oversold condition. It does not mean the market will jump today, it just means that it is oversold and will most likely bounce off this level.
Perhaps we will get that bounce after the Fed makes their interest rate announcement today at 2:00 EST.
The weekly resistance area of 2,615.41 to 2,634.34 should still be valid on a rally.
And 2,551 to 2,553 should be a resistance level from yesterday's daily bar.
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 25.69. The VIX finally closed above the 25 level.
The next level on the upside is 28.13. I would expect resistance there.
23.44 should be support on the downside.
Yesterday, both the S & P 500 and the VIX closed higher, created a divergence.
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
The S & P 500 is now sitting right around the 2,548.80 level. I am biased for a drop to 2,500, but if the market can hold 2,548.80, it could bounce sharply.
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.
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 158.42. To move higher, it will need two closes above 160.94.
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 136.85. It closed down 0.17 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 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 119.60. 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 118.15. Target is still up to 118.75 level and the GLD is within 55 cents of it.
117.19 should be minor support. And 116.41 as well.
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 continues to drop and closed under its lower band on the daily chart. If closed at 59.52 and the lower band is 60.65.
This tells us to expect a retest of the lower band once the XLE does bounce.
59.38 is a key level for the XLE. Two closes under 59.38 and the XLE could drop as low as 50.
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 84.85. It closed up 0.12 on the day. The bounce continues. The question now is when will it fail?
I suspect either at the 85.16 level or the 85.94 level.
I would expect a move up to 85.16.
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 166.07 yesterday. It closed up 2.13 on the day.
Apple continues to be oversold. The key level is 162.50. Apple will need to hold this level to bounce.
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.