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.
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After six days of higher closes, the S & P 500 closed to the downside yesterday. The market closed at 2,716.26, down 15.96 points on the day.
This should not be a shock, because the bounce came right back to the midband on the 60 minute chart for the S & P 500. The midband is now 2,749.75. Call it 2,750.
It is amazing how many times, a stock or market will rally to the midband after being at or under the lower band.
And Friday, the S & P 500 hit the midband. We know one of two events will happen. Either price will clear the midband or it will get repelled.
The QQQ and the NASD Composite did clear their midbands. Sometimes that can give you a clue to see if the S & P 500 will follow.
The Dow Jones Average formed the exact same pattern as the S & P 500. On Friday, the DOW came right to the midband on its 60 minute as well.
With a close yesterday at 2,716.26, the S & P 500 is still above the support level from last week's price bar, which is in the 2,684 to 2,688 area.
Should the market continue lower, watch to see if this area holds as support.
The other key at the moment is that the downside confirming level is 2,714.88. For the market to head lower, it will need two closes under that level. Watch to see how price reacts around this level as well.
As for the VIX, it is testing the upper band on its daily chart. The upper band is 20.99 and it closed at 20.60. For the market to head higher, it will should break under the upper band and head lower.
If it breaks through the upper band, it would tell us to expect a move lower in the markets.
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 20.60. At this point, minor resistance is at 21.88. And the minor 23.44 level should also resistance.
As I mentioned above, watch to see if the VIX can clear 20.99, which is the upper band on the daily chart.
On the downside, the key level remains at 18.75. Two closes under 18.85 and the VIX should drop back to 12.50.
$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
With a close at 2,716.26 there are a few levels to watch today. Of course, on the downside, there is the 2,714.88 confirming line. Two closes unde this level and the market should test 2,656.
2,695.30 is a minor support level. If this level is tested, I would expect support to hold.
Pre open, the S & P 500 is relatively flat.
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 165.29. The QQQ should test the 168.75 level.
And minor support continues at 162.50. A break above 165.63 and the QQQ should head higher.
IWM:
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 **
Minor level: 150.78
Major level: 150.00
The IWM closed at 152.08. A close today under 152.35 and the IWM should test 150.
I would expect strong support 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 118.19. The TLT is oversold and a bounce should be expected.
A close today under 118.36 and the TLT should test 117.19. I expect the TLT to bounce around for a bit before the net move ensues.
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 126.24. If the GLD closes under 127.35 today, it should test 125.
125 should be strong support. A break under this level tells us the GLD should head lower.
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 67.75. The XLE will need to clear the 67.97 level to head higher. A close under 67.97 and the XLE should test 65.63.
The XLE is sitting right on its mid band on the daily chart. 67.26 is the midband and should offer support.
FXY:
Major level: 91.41
Minor level: 91.22
Minor level: 90.83 **
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
The FXY closed at 89.39. The FXY gapped down and closed back inside its upper band on the daily chart.
88.28 should offer support.
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
Apple closed at 171.85. Apple needs to clear 171.88 to head higher.
Minor support should be at 170.31 and 168.75.
The 166 area should be strong support from last week's weekly price bar.
WATCH LIST:
Bullish Stocks: LMT, BA, RTN, MA, CME, PANW, FFIV, RHT, ATHN, WDAY, EW, DATA, SFLY, TPR
Bearish Stocks: ULTA, AAP, EXPE, THS, CTB, PDCO, MXL, SKT, GOV
Be sure to check earnings release dates.
