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 - $1.25
Short December $20 Call - $.30
NCR Long Jan 16 $27 Call
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X Long at $14
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ASNA Long at $14.20
Total Premium collected - $.75
LUK Long December $18 Call - $.35
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Yesterday, saw a massive 30 point range in the S & P 500 based on news out of Germany that disappointed investors.
The VIX spiked up over 13%.
The question is can you anticipate this type of sell off?
We can look at the VIX to help us determine if the market is set to pull back.? When the VIX gets down to the 12.50 to 14.06 level, you can generally expect the VIX to rally.
For the last two years it has rallied off those levels, so it is reasonable to assume it will do it again.
As for the S & P 500, it blew through the support levels and actually took out the next level, which was 2,062.50.
At this point, there is a minor support level at 2,046.90.
So, if the S & P closes under that level for two days, I would expect a drop to 2,015 and possibly to 2,000.
Another quick point.? At 10:20 EST yesterday, the VIX stopped right at the 17.19 level.
However, it broke above the top band on the 10 minute chart.? This told you to expect another rally in the VIX.
And that is what happened.? The VIX kept climbing which told you the markets should continue down.
Here are the key levels for the markets.
?
VIX:?
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 took out the 18.75 level.? For it to move up, it would need two closes above 20.31.
S & P 500 Cash Index:?
Major level - 2,125.00
Minor level - 2,101.62
Major level - 2,093.80 *
Minor level - 2,085.98 *
Minor level - 2,070.33
Major level - 2,062.50
Minor level - 2,054.68
Major level - 2,031.30
The 2,031 level act as support.? However, follow the instructions above regarding the S & P closing under the 2,046 level.
Nasd 100 (QQQ):?
Minor level - 116.41 *
Major level - 115.63
Minor level - 114.85
Minor level - 113.28 *
Major level - 112.50
Minor level - 111.72
Minor level - 110.16
Major level - 109.38
The QQQ close one penny above the 112.50 level yesterday.
If it gets violated, look for a move down to 109.
TLT:?
Major level - 125
Minor level - 124.22
Minor level - 122.66
Major level - 121.88
Minor level - 121.09
Minor level - 119.53 *
Major level - 118.75
Minor level - 117.97
Minor level - 116.40
Major level - 115.62
The TLT dropped over 3% yesterday.
A move down to 112 to 115 would not be out of the question.
GLD:
Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13
Minor level - 102.34
Minor level - 100.78
Major level - 100.00
Major level - 96.88
The GLD came within 50 cents of the 100 objective.
If the GLD can consolidate at these levels, it would start to look attractive.
XLE:
Major level - 71.88
Minor level - 69.53 *
Major level - 68.75
Minor level - 67.97 *
Minor level - 66.41
Major level - 65.63
Minor level - 64.85
Major level - 59.38
The XLE dropped under the 65.63 level yesterday, closing at 65.11.
Two closes under 64.85 and the XLE should drop to 59.38.
Apple:
Major levels for Apple are 125, 118.75, 112.50, 106.25, 100, and 93.75.
106 should be a major support level for Apple.?
Objective should be to 112.50.
Watch list:
Bullish Stocks: GOOGL, PANW, NFLX, DY, FSLR,? MSFT, CTRP, JEC, XRS, XL
Bearish Stocks: CMG, CBRL, CELG, TGT, CRI, AXP, DECK, CAR, RGLD, SHO, MOS, RRC
Be sure to check earnings release dates.
