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.
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The S & P gapped down 26.46 points lower at the open. After that, the market drifted lower to hit a low of 3,070.33. The low for the day broke under the lower band on the 10 minute chart.
The lower band on the 10 minute chart was 3,080. So, the low for the day broke about 10 points under the lower band.
After finding support, the S & P rallied back to close at 3,093.20.
As you know, the key price level that we were looking for yesterday was the minor 3,085.95 level,
And if you look at an intra day chart after the rally began, the market came right back at 3,085 and stalled right at the level.
It finally managed to clear the minor level and came back to test it from above.
And it found support and managed to close about 7 points above the level.
As I said yesterday, the minor level just under the major level that was just violated often offers support on a sell-off.
The major level, of course, is 3,125. And the minor level is 3,085.95 which was tested yesterday and the level that the S & P broke under. It took it out by about 15 points.
For that matter, I had mentioned that the minor level above the major level that was violated often acts as resistance.
The minor level above 3,125 is 3,164.08 and the S & P got as high as 3,154 before this pullback.
The market fell short of the minor level by about 10 points.
So what is interesting is that the amount the market fell short of the 3,164 level and broke under the 3,085 level came within 5 points of each other.
This may all seem a bit confusing, but once again the major concept is the price expectation around these price levels I share.
The key being that you can anticipate where the market can possibly reverse.
If this seems a bit confusing, send me an email and I will try to explain this a bit further.
The day ended up closing at 93% of the range of the daily price bar.
This suggests that the odds of the high being violated before the low are almost 100%.
And with the market trading about 10 points higher before the open, the high should be violated right off the open.
Watch yesterday's high of 3,094.97 for support if the market pulls back.
I do expect another downswing, but we should see a follow through today.
COUP reported last night and it's trading about $7 lower.
CRM reported last night and is trading about $2 lower. RH reports this afternoon after the close.
DOCU and ULTA report Thursday after the close.
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 out at 15.96 yesterday. This was a spike of over 7%.
The VIX has moved up one level off the 12.50 level. To move higher, it will need two closes above 16.41. The VIX could move up to 18.85 without affecting the uptrend.
We expected a move up to 15.63 and that was taken out.
Watch the 16.41 level on the upside.
SPX:
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
Minor level: 2,695.35
Major level: 2,656.30
The S & P closed at 3,093.20. With a projected open around 3,103, watch yesterday's high of 3,094.97 for support.
The 3,085.95 level should also offer support.
A retest of 3,125 should be the next move.
QQQ:
Major level: 206.26
Minor level: 205.48
Minor level: 203.91
Major level: 203.13 HIT
Minor level: 202.35 **
Minor level: 200.78
Major level: 200.00
Minor level: 199.22
Minor level: 197.77
Major level: 196.88
The QQQ closed at 201.41. The QQQ had the similar gap open pattern as the S & P. After gapping to the downside, the market managed to rally back to close higher.
The only difference is that the QQQ closed under the minor 202.35 level. It will have to recoup this level to move higher and my best guess is that it will.
203.91 should now be minor resistance. The 200 area should be 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 159.68. The IWM did close under 160.94, so it will need to recoup this level to head higher.
162.50 should now be resistance. And technical resistance is around 160.50.
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
Minor level: 135.84
Minor level: 132.81
Major level: 131.25
The TLT closed at 141.21. This was 20 cents under the minor 141.41 level, which the TLT needs to close above to move higher.
Watch to see if the TLT can hold 140.63. If it can't, I would expect a drop to 139.85.
The 139 to 140 area should still offer technical support.
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 139.11. The GLD closed under the minor 139.85 level which should be resistance.
If would have to clear this level to head higher.
Watch for support at the 138.28 level. If it fails at this level, I would expect it to continue lower.
The key level is 134.38 on the downside. If the GLD has two closes under this level, it could drop to 125.
Short term, there is technical resistance at 139, which was right were the GLD rallied to yesterday.
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 58.10. 59.60 is a key level for today. If the XLE closes under this level, I would expect a drop to 56.
On the upside, watch to see if the XLE can clear 59.38. If it can, look for follow-through to the upside.
57.50 should now be support. And the 59.50 area should offer technical resistance. It will need to clear this area to head higher.
AAPL:
Major level: 281.25
Minor level: 277.35
Minor level: 269.54
Major level: 265.63 HIT!
Minor level: 261.72
Minor level: 253.91
Major level: 250.00
Minor level: 246.88
Minor level: 240.63
Major level: 237.50
Apple closed at 259.45. Apple needs to clear 261 to head higher.
Support should be at the 253.91 level.
Technical support should be in the 256 area.
WATCH LIST:
Bullish Stocks: AMZN, LMT, ROP, HUM, SHOP, NTES, ADBE, FLT, DPZ, BDX, LULU, VRTX, NVDA, FB, BABA, RH, PEN, V, DECK, ROKU, COUP
Bearish Stocks: AAP, TAP, IRBT, FL, CHL, OXY, IRM
Be sure to check earnings release dates.
