While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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
RRC Long at $11.85
Total Premium Collected $0.70
RRC Long at $9.20
RIG Long at $8.81
Premium Collected - $1.45
FEYE Long at $17.18
Total Premium Collected $0.80
DBX Long at $17.18
DBX Short Jan 31st-$17 call @ $0.70
.........................................................................................
As I mentioned yesterday, today is an early close at 1:00 pm EST. And the market are closed tomorrow for Christmas.
With the short week, this will be the last update for this week.
The market continues this historic run. The S & P 500 closed slightly higher for the third consecutive day.
Monday closed out at 3,224.01. The market closed 2.79 points higher.
Yesterday's low was 3,222.30, which was right in the support area from Friday's daily bar. As I mentioned yesterday, the support area for yesterday was in the 3,220 to 3,222 area.
Support from yesterday should now be around 3,225.
Yesterday's range was only 5.48 points. Not quite nirvana for day trading. But, I tend not to look to do day trades around the Holidays.
Narrow range trading is only one problem. The other problem is thin trading. Especially on a half-day like today.
Yesterday's narrow range was 29% of the daily average true range, which is now 19.20 points.
At year-end, I also tend to expect tax selling. But at this point, it has not kicked in. The question is will it this year?
At some point, the market will pull back. That is inevitable. The question is when and what will begin the pullback?
With the Christmas holiday tomorrow, it hardly seems like the perfect time to discuss a bearish event, but I do like to look ahead.
Let's look at some of the sentiment indicators.
First, the bullish percent index now reads 77.8%. Usually, when this reading exceeds 75%, it signals that a top is coming. It could climb above 80% and that would certainly indicate that there is too much froth in the market.
The percent of stocks above their 200 day average now reads 81.96%.
This is over the 80% level that would suggest the market is overbought.
In taking a look at the monthly chart, the upper band is now 3,051.90. Yesterday's close was 3,224.01 or about 170 points above the upper band. This should be support when the market does pull back.
The final indicator to look at is the VIX. It is trading at the historic low level of 12.50. In fact, the last seven days have closed within 50 cents of it.
Typically, a market reversal is preceded by a divergence in the S & P and the VIX. That is, they will both close in the same direction.
And that is exactly what has happened in the last two days.
Both the S & P and the VIX have closed higher the last two days.
All these factors add up to the fact that we need to be cautious that a pullback should happen.
Pre open, the S & P is trading about 2 points higher.
Here are the Key Levels for the Markets:
$VIX:
Major level: 21.88
Minor level: 21.10
Minor level: 19.53
Major level: 18.75
Minor level: 17.97
Minor level: 16.41
Major level: 15.63
Minor level: 14.85
Minor level: 13.28
Major level: 12.50 <
Minor level: 11.72 **
Minor level: 10.16
Major level: 9.38
The VIX closed eleven cents above the 12.50 level. The VIX at this point, has not made a serious push, and the market will not pull back until it does. But, as I mentioned above, the VIX and the S & P have diverged the last two days.
The 13.28 level should still be resistance.
11.72 should still be support. A break under it and the VIX should head down.
SPX:
Major level: 3,281.20
Minor level: 3,242.15
Minor level: 3,164.08 ***
Major level: 3,125.00 < Hit
Minor level: 3,085.95
Minor level: 3,007.85
Major level: 2,968.80
Minor level: 2,929.73
Minor level: 2,851.58
Major level: 2,812.50
Minor level: 2,773.45
The S & P closed at 3,224.01. The short term target should be to the minor 3,242.15 level. And the S & P is about 18 points under it.
3,203.10 should be minor support, so watch this level today. And the 3,220 area should be support as well.
Technical support is around 3,208.
QQQ:
Major level: 212.50 <<
Minor level: 211.74
Minor level: 210.17 **
Major level: 209.39
Minor level: 208.61
Minor level: 207.04
Major level: 206.25
Minor level: 205.48
Minor level: 203.91
Major level: 203.13
Minor level: 202.35
Minor level: 200.78
Major level: 200.00
The QQQ closed at 211.81. The objective for the QQQ should still be to the 212.50 level. And yesterday's high came to within 35 cents of the target.
At this point, support should be at 210.17. And 211.73 should now be minor support as well.
The 210 should offer technical support.
IWM:
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
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
The IWM closed at 166.30. The target for the IWM should be up to 168.75 level.
The minor 164.06 level should offer support.
162.50 should offer strong support. 165 should be technical support.
Short term charts remain bullish, so momentum is still bullish. Same as yesterday.
TLT:
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 HIT
Minor level: 135.84
Minor level: 132.81
Major level: 131.25
The TLT closed at 136.45. The TLT will still need two closes above 138.28 to move higher. Two closes under 135.84 and the TLT should continue down to 131.25.
137.50 should be resistance. And technical resistance is at that level as well.
GLD:
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: 135.16
Major level: 134.38
The GLD closed at 139.95. A break under 138.28 and the GLD should continue lower. At this point, the GLD is holding 138.28.
Watch the 140.63 level on the upside. A break above it and the GLD should head higher. But, it should be resistance until it is violated.
137.50 should be strong support. So if the GLD does break under it, I would expect it to head lower.
The key level is 134.38 on the downside. If the GLD has two closes under this level, it could drop to 125.
Technical resistance is around 140. Short term, the GLD is overbought.
XLE:
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
Minor level: 55.86
Minor level: 55.08
Major level: 54.69
The XLE closed at 61.99. The objective for the XLE should be for a move up to 62.50. And the XLE is now within 50 cents of it.
The XLE continues to hold just above the midband, which is now 60.48. This should be support.
The XLE has still not crossed into an uptrend on the daily chart, but it is inching closer. If the XLE can cross into an uptrend and start to move above the midband, it could have a strong move higher.
AAPL:
Major level: 300.00
Minor level: 296.88
Minor level: 290.63
Major level: 287.50 HIT
Minor level: 284.38
Minor level: 278.13
Major level: 275.00
Minor level: 271.88
Minor level: 265.63
Major level: 262.50
Apple closed at 284.00. 278.13 should be support. Look for a move up to 288.
And minor support should now be at 269.54. And technical support is around 280.
Needless to say that short term trends remain bullish.
WATCH LIST:
Bullish Stocks: TSLA, SHOP. HUM, ADBE, ASML, AAPL, BDX, NVDA, GS, BABA, FB, ADSK, DECK, URI, CB
Bearish Stocks: BA, VMW, WIX, CHKP, UTHR, CVLT, CAKE, GOOS, ALEX
Be sure to check earnings release dates.
