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
TEVA Long at $15.30
TEVA Short Jan 4th-$15.50 Call @ $0.45
DIS Long Jan 25th $107 Call @ $3.35
DIS Long Jan 25th $107 Put @ $3.10
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Friday, you should have closed out the CVX debit spread, assuming you put the trade on when I suggested it. We were able to catch the bounce.
And also, on Friday, I suggested a straddle on DIS. With this structure, we are looking for increased volatility without a directional bias. In other words, we want to see DIS move.
Today is a full trading session. But, all markets are closed on Tuesday for New Years Day.
Friday actually closed 3.09 points to the downside. And the high for the day was 2,520.27. Based on the last pivot low, the dead cat bounce we had been looking for measured 173.69 points.
But, a major negative was the fact that the S & P 500 could still not close above the lower band on the daily chart.
The market closed Friday at 2,485.74 and at 27% of the range for the day. So, there is a slight bearish bias for today.
Resistance from Friday's daily bar is in the 2,492 to 2,496 area.
If we scope back and look at the weekly bar, we see that the S & P 500 closed 69.12 points higher.
And it closed at 80.1% of the weekly bar. This puts the odds of violating last week's high of 2,520.27 before the low of 2,346.58, right at 80%.
As I mentioned Friday, a close above the prior week's midpoint which was 2,504.84 would have been bullish. Because it didn't, I would still expect resistance there.
And the support area from last week's weekly bar is in the 2,433 to 2,443 area.
Finally, I do want to mention the monthly price bar.
As you know, today closed out the month of December and, of course, the year.
The December monthly price bar is shaping up to be a long-range candle.
Through Friday, it had a range of 454 points. Compared with the monthly average true range of 161.37, the range is almost three times the average. This certainly characterizes it as a long range candle.
The midpoint of the monthly bar is 2,573.38 and Friday's close was 87 points under it.
A close under the midpoint would be bearish.
Also, the monthly bar will close well under the upper band on the monthly chart. The upper band is 2,755.75. So, as of Friday, the market is about 220 points under the upper band.
Where the market closes should tell us going forward what the next move will be.
We do continue to have a short term oversold condition with a bias to the upside from the weekly bar.
For this market to move higher, it will need to clear the 2,500 level. Friday did manage to clear the 2,500 level but it could not close above it.
The next update will be on Thursday. I will take a look at the 2018 annual bar, and the December monthly bar.
In closing, I do want to wish you and your family a Very Happy New Year!
Continue to monitor the levels as I mentioned above.
Here are the Key Levels for the Markets:
$VIX:
Major level: 43.75
Minor level: 40.63
Minor level: 34.38
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
The VIX closed at 28.37, down 1.59 on the day. The VIX is back under the upper band on the daily chart. The upper band is 29.60.
A close today under 29.69 would suggest the VIX should drop to 25.
Watch to see if the VIX can move under the upper band.
At this point, 31.25 and 29.69 should be resistance. And 26.56 could offer more support.
SPX:
Major level: 2,578.10
Minor level: 2,558.58
Minor level: 2,519.53
Major level: 2,500.00 <
Minor level: 2,484.38
Minor level: 2,453.13 **
Major level: 2,437.50
Minor level: 2,421.88
Minor level: 2,390.63
Major level: 2,375.00
The S & P 500 still has not recovered and closes above the lower band. That level is now 2,491.56.
This is also right at the major 2,500 resistance level which the S & P 500 will need to clear to move higher.
Pre open, the S & P 500 is trading about 23 points higher. This should put the market above the lower band.
Watch to see if the lower band can hold on a retest.
The next minor level on the upside is 2,519.53.
2,468.80 is minor support.
QQQ:
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 QQQ closed at 152.97. This now suggests that the QQQ should test 156.25.
151.56 should be minor support. And on the upside, 159.38 should offer strong resistance.
IWM:
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 <
Minor level: 129.69 **
Minor level: 126.56
Major level: 125.00
The IWM closed at 132.86. Just like the S & P 500, the IWM is still trading under the lower band on its daily chart. That level is 133.70.
Watch to see if it can clear it today.
If the IWM can hold the 131.25 level, I would expect a move up to 135.
131.25 should be support.
TLT:
Major level: 123.44
Minor level: 123.05
Minor level: 122.27
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
The TLT closed at 121.05, up 1.01 on the day. The TLT is back above the 120.31 level.
The daily chart continues to inch closer to an uptrend.
120.31 should be support.
GLD:
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
Minor level: 117.97
Minor level: 116.41
Major level: 115.63
The GLD closed at 121.06. Biased now for a test of 121.88.
The GLD did clear the midband. That level is 120.21 and should now offer support.
If the GLD can clear the minor 121.09 level, expect it to move higher.
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 closed at 57.05. It was the seventh day trading under the lower band. The lower band is now 58.24.
The XLE will need to clear the lower band in order to head higher.
56.25 is minor support. And also minor support is at 57.03.
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 close at 86.63. It was up 0.63 on the day. It is right at the midband on the daily chart. That level is 86.68.
The FXY will need to clear this level to move higher. If it can't, expect it to drop.
86.33 should offer minor support. And 87.11 is minor resistance.
AAPL:
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: 159.38
Minor level: 153.13 **
Major level: 150.00 <
Minor level: 146.88
Minor level: 140.63
Major level: 137.50
Apple closed at 156.23, up 8 cents on the day.
159.38 should offer minor resistance. And minor support is at 154.69.
Biased now for a move up to 162.50.
WATCH LIST:
Bullish Stocks: BGS, RCII,
Bearish Stocks: RTN, JAZZ, UTX, RACE, JACK, GILD, TPX, SFL, SJM, GWPH, CCL, KAR, HES, BCE
Be sure to check earnings release dates.