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 $15.20
Premium Collected - $3.55
AMC Long at $15.27
Premium Collected - $2.25
UNIT Long at $17
Premium Collected - $0.35
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Again, I would like to reiterate what I said yesterday and thank you for your kind words of encouragement. It truly is great to be back writing this.
Before I begin today, I need to mention that Monday will be a stock market holiday, due to the celebration of President's Day here in the United States. So, I am back, but will convene again on Tuesday.
This recent market activity really embelleshes what I teach and share. I tried to simply explain it in the piece I wrote yesterday. I had actually suggested to one of your fellow members to save that piece and print it out. But, it discusses how to help determine if a market is topping, and what to look for when it is bottoming.
Another theme I failed to mention is this. We know the market is overbought simply based on the fact that the market was trading above its upper extreme bollinger band on multiple longer term timeframes.
We also know that can be considered a sign of strength as well.
Because the market had been showing strength, you don't need to catch the short to be perfect. You simply can step aside and look to catch the bounce.
But, with the S & P 500 trading above its extreme band, you limit the longside, at the very least. Look at it as a warning.
To me, trading the bounce is a more precise measurement. That is because the market always has a selling climax, or two, before it is ready to bounce.
That is why I say you are better off trading with the trend, rather than the against the trend.
For the week, the S & P 500 is shaping up to have an inside bar. This usually is followed by an expansion.
The key resistance level to watch at the moment is 2,734.40. If the S & P 500 can clear this level, it should act as support.
The other key level to watch is 2,793.02, which is the upper band on the weekly chart. About 100 points higher, at 2,849.59 is the upper band on the daily chart.
Typically, after breaking through the upper band and closing back inside the bands, the market will test the upper band from below.
And that is what is happening now.
On a shorter term perspection, 2,746.94 is the price level to watch. that is the midband on the 60 minute chart for the S & P 500. After rallying from the bottom band, the objective is back to the midband. And that level should be tested today.
If the market can clear 2,746.94, it should act as support.
Pre open, the S & P 500 is trading slightly to the downside. Watch the levels I mentioned above.
Here are the Key Levels for the Markets:
$VIX:
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
Minor level: 17.19
Minor level: 14.06
Major level: 12.50
Minor level: 10.94
The VIX closed at 19.13. The VIX had jumped way above its upper band on the its daily chart, hitting a high of 50.30.
Watch to see if the VIX break under 18.75. That is the key level at the moment.
On the upside, 20.73 is the upper band on the daily chart, and should offer resistance.
$SPX:
Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93
Major level: 2,734.40 <
Minor level: 2,714.88
Minor level: 2,675.83
Major level: 2,656.30
Minor level: 2,636.75
Watch the major 2,734.40 level. This level should be tested today. A failure here and the market could drop.
A violation and it should offer support.
QQQ:
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
The QQQ closed at 165.70, closing just above the minor 164.06 level. A close today above 164.06 and the QQQ should test 168.75.
The 163 area should offer support.
IWM:
Major level: 162.50
Minor level: 161.72
Minor level: 160.16
Major level: 159.38
Minor level: 158.60
Minor level: 157.03
Major level: 156.25
Minor level: 155.47 **
Minor level: 153.91
Major level: 153.13 <
Minor level: 152.35
The IWM closed at 152.80. Watch the 153.13 level. If the IWM can clear 153.13, it should head higher.
Support is at the 150 level.
TLT:
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
Minor level: 117.58
Major level: 117.19
The TLT closed at 118.07, taking out the major 118.75 level.
A close today under 118.36 and the TLT should drop to 117.19.
GLD:
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13 <
Minor level: 127.35
Minor level: 125.78
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
The GLD closed at 128.38. The GLd did retest the 128.13 level. Watch to see if this holds as support. If it can't I would expect support around 125.
129.34 is the upper band on the daily chart.
XLE:
Minor level: 76.95
Major level: 76.56
Minor level: 76.17
Minor level: 75.39
Major level: 75.00
Minor level: 74.22
Minor level: 72.66
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
Major level: 68.75
Minor level: 67.97
Minor level: 66.41
Major level: 65.63
The XLE closed at 68.29. The 65.63 level should offer support.
To move higher, the XLe will need two closes above 69.53.
FXY:
Major level: 89.06
Minor level: 88.87
Minor level: 88.48
Major level: 88.28 <
Minor level: 88.09 **
Minor level: 87.70
Major level: 87.50
Minor level: 87.31
Minor level: 86.92
Major level: 86.72
Minor level: 86.53
The FXY closed at 90.41. 90.63 is the objective. Watch to see if the FXY can clear this level.
Also, the FXY is trading above its upper band on its daily chart.
If you stayed long, as I suggested on the FXY, you should be doing well.
AAPL:
Major level: 175.00
Minor level: 174.22
Minor level: 172.66
Major level: 171.88
Minor level: 171.10
Minor level: 169.53
Major level: 168.75
Minor level: 167.97
Minor level: 166.41
Major level: 165.63
Minor level: 164.85
Minor level: 163.28
Major level: 162.50
Apple closed at 172.99. A close today above 171.88 and 175 should be tested.
168.75 should offer support.
WATCH LIST:
All watchlists will be updated on Tuesday.
Be sure to check earnings release dates.
