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:
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UNIT Short Feb 21st Call @ $0.30
KEX Long (2) Mar 20th - $75.00 calls @ $2.60
KEX Long (1) Mar 20th - $75.00 put @ $3.10
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The market pulled back on Friday. The day ended closing 18.07 points lower. And the week closed out at 3,327.71.
But, as I wrote Friday, I felt the range for the week was already in based on the fact through Thursday, the weekly range was already 167% of the weekly average true range.
And that turned out to be the case. This type of analysis can be very helpful when you trade intraday.
Having a bias lets you focus on finding an entry in the direction of the bias.
For example, on Friday, the market gapped lower at the open. After finding support at around 3,325, the market rallied up to the high of the day, which was 3,341.42.
From that price, the market sold off to the low of the day, which was 3,322.12.
This was a move of 19.30 points. On the SPY, the tracking ETF for the S & P 500, this was a move of about 2 points.
With the leverage of trading options that expire the same day, this 2 point move would be about a double.
The day ended up closing at 29% of the daily price bar. This suggests we should expect follow-through to the downside.
Resistance from Friday's daily bar is in the 3,331 area.
The weekly price bar was strongly bullish. The weekly bar closed 102.19 points higher.
And the weekly range was 112.30 points. This was 167% greater than the weekly average true range, which is 67.31 points.
The weekly price bar closed above the prior two bearish weekly bars. It came within 10 points of closing above the high from two weeks ago.
Support from last week's weekly price bar should be in the 3,291 area. Just under that level is support at 3,281.
The weekly close percentage was 82%. This does suggest that last week's high should be violated before the low.
Last week's high was 3,347.96 and the low was 3,235.66.
Based on Friday's daily price action and last week's weekly price action, we would expect weakness early in the week. And then support to come in and the market to try to rally to a new high.
Wednesday we will get earnings from SHOP. And Thursday we will hear from NVDA and EXPE. ROKU also reports 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 Friday at 15.47. The VIX bounces slightly but still manages to close under the major 15.63 level.
The next key level is 14.85. Two closes under this level and the VIX should test 12.50 again.
16.41 should be resistance. The 14 area should offer technical support. And technical resistance is at 16.40, which is right at the minor level.
S & P 500:
Major level: 3,427.40 <
Minor level: 3,398.35
Minor level: 3,320.25 **
Major level: 3,281.20 <
Minor level: 3,242.15
Minor level: 3,164.08
Major level: 3,125.00
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
The S & P closed at 3,327.71. This was the third close above the minor 3,320.25 level, which should be support.
The 3,296 area should be technical support.
Short term trends remain bullish, so buying against support is still the best strategy.
QQQ:
Major level: 231.25 <
Minor level: 230.48
Minor level: 228.91 **
Major level: 228.13 <
Minor level: 227.35
Minor level: 225.78
Major level: 225.00
Minor level: 224.22
Minor level: 222.69
Major level: 221.91
Minor level: 221.13
Minor level: 219.56
Major level: 218.75
Minor level: 218.00
The QQQ closed at 229.20. The QQQ sold off slightly, but still managed to close above the minor 228.13 level for the second day.
This now suggests that the objective for the QQQ should be up to 230.48. And the major 228.13 level should be support. And the minor 227.35 should also be support.
The QQQ is still above the upper band on the daily chart. That price level is 228.11. This should now be support.
Technical support is at 227. And the 233 area should be resistance.
IWM:
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 IWM closed at 164.88. The minor 164.06 level should offer support. If it cannot hold, I would expect 162.50 to hold.
The IWM dropped back under the midband on its 60 minute chart. That price level is now 165.63 and should be resistance. The S & P will have to clear this level to head higher.
Support should be at 164.
TLT:
Major level: 146.88
Minor level: 146.10
Minor level: 144.53
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
The TLT closed at 144.43. At this point, the TLT will need two closes above 144.53 to test the 146.88 level.
By clearing 143.75, it should now be support.
The 144 area should offer technical support as well.
GLD:
Major level: 150.00
Minor level: 149.22
Minor level: 147.67 **
Major level: 146.89 <
Minor level: 146.11
Minor level: 144.54
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
The GLD closed at 147.79. With the GLD closing above 147.67, a close today above that level and the GLD should move up to 150.
The GLD did bounce up to the 148 area, as I mentioned Friday.
The 148 area should be technical support. A break under it and the GLD should head lower.
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: 55.47
Minor level: 53.90 **
Major level: 53.12 <
Minor level: 52.34
Minor level: 50.78
Major level: 50.00
The XLE closed at 53.98. The XLE closed back under 53.90. It will have to reclaim this level to head higher. If it can't, look for a price drop.
53.78 is a key support level. If this can hold, look for the XLE to continue to bounce. If it can't, look for a further drop.
Technical support should be around 54. And resistance at 58.
AAPL:
Minor level: 334.38
Minor level: 328.13
Major level: 325.00 <
Minor level: 321.88 **
Minor level: 315.63
Major level: 312.50
Minor level: 309.38
Minor level: 303.13
Major level: 300.00
Minor level: 296.88
Minor level: 290.63
Major level: 287.50
Minor level: 284.38
Apple closed at 320.03. The key level in the short term is 321.88. A close under it today and Apple should drop to 312.50.
The upper band is 333 and is the level to watch on the upside.
The 317.50 area should offer technical support on a pullback and a great place to get long.
WATCH LIST:
Bullish Stocks: TSLA, SHOP, LMT, ADBE, BIIB, MA, LRCX, COST, CTAS, VRTX, HD, LHX, RETA, SYK, ADSK, VRSK, CB, SPLK, UTX
Bearish Stocks: LEA, DLTR, PVH, XOM, GRA, LNG, OLLI, CLB, CARG,
