==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:
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
RRC Long at $11.85
Total Premium Collected $0.70
RRC Long at $9.20
RIG Long at $8.81
Premium Collected - $1.45
FEYE Long at $17.18
Total Premium Collected $1.06
CDAY Long March 20th - $75 Put @ $3.00
CDAY Short March 20th - $70 Put @ $1.25
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Yesterday, I suggested you close the CDAY position. The trade produced a small profit of around $90 for 4 days. There should more short opportunities in the coming weeks.
Meanwhile, yesterday also saw the largest one day drop in the S & P 500 since the 85.72 drop on August 14, 2019. That drop was 2.93%.
The sell off yesterday resulted in a lower close of 111.86 points and a drop of 3.35%.
The day closed out at 3,225.89.
This is all a reaction to the growing spread of the coronavirus. As you know, the markets hate uncertainty.
However, as I have been demonstrating recently, the markets have been oversold for quite some time.
One indicator that I use to measure extremes is the bullish percent index, which reached extreme levels back on January 17th when it read 83%.
After dropping from that level, it ran up to a high of 78.8% on February 20th.
From that level, it now reads 62%. Yesterday's drop alone was 14.8%. Notably, this was the largest one day drop I can recall.
The other extreme we have been monitoring has been the upper band on the daily chart.
The S & P made two runs to the upper band before failing after the last one.
I do need to point out that the S & P made the run from below the lower band back in December 2019 and took out the midband and rallied to the upper band.
In other words, it made a picture-perfect move over that timeframe.
But, that is yesterday's news. The question is where does the market go from here?
First off, I don't believe the selling is over. This is primarily because the down to up selling yesterday was 6.38. This is not quite a selling climax. To qualify for a climax, the down to up volume needs to be greater than 9 to 1.
One of the price levels I mentioned yesterday was the last pivot low for the S & P, which is 3,214.68. Yesterdays low went to 3,214.65, or three cents under it.
The S & P spent 13 days going from 3,214.68 to a high of 3,393.52.
And it took 4 days to give up those gains.
The question now is where should resistance be on a bounce.
Resistance from yesterday's daily price bar is in the 3,237.23 area. Then, if this level is cleared, the next level of resistance is at 3,241.75.
And if a rally manages to take out the high of 3,260, then the level to watch would be 50% of the bear gap, which is 3,294.
Pre open, the S & P is trading about 15 points higher. This would put the open right around the 3,241.75 level I mentioned above.
The market closed at 25% of the range of the daily price bar, so the odds favor a violation of the low before the high.
I do want to point out that the midband on the daily chart is 3,004. This level should be support the first time it is approached.
A drop to 3,003 would be a pullback of 390 points or 12%. Of course, I will continue to monitor these pressure points as the market trades into the future.
PANW reported last night and is trading about $36 lower. HD reported and is trading about $6 higher.
CRM reports today after the close.
BKNG reports Wednesday after the close and SQ also reports the same day.
Here are the Key Levels for the Markets:
$VIX:
Minor level: 25.78
Major level: 25.00 <
Minor level: 24.22
Minor level: 22.66
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
The VIX had a massive spike of 46.55%. It closed up 7.95 on the day. It closed out the day at 25.03.
The VIX closed above the upper band on its daily chart. This tells us 2 things. The first is that the VIX is overbought. And the second is that we expect a retest of the upper band after the VIX drops under the upper band.
20.75 is the upper band on the 60 minute chart, and the VIX is trading above that level as well.
Watch the minor 24.22 level today.
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
The S & P closed at 3,225.89. This put the S & P below the minor 3,242.15 level. A close today under this level and the S & P should drop to 3,125.
The major 3,281 level should be resistance.
Technical resistance should be at 3,303.
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
The QQQ closed at 221.39. This put the QQQ under the major 221.91 level.
Watch the minor 221.13 level on the downside and 222.69 on the upside.
219.99 is the prior pivot low. A break under this level would suggest the QQQ will head lower. The 224 area should offer technical resistance.
And technical support should be around 220.
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 162.07, just under the major 162.50.
It needs to close above the 164.06 level to head higher.
160.03 is the prior pivot low and should be tested.
161 is the lower band on the 60 minute chart. The 166 area should be resistance. 161.36 should be support.
TLT:
Major level: 153.13
Minor level: 152.35
Minor level: 150.78
Major level: 150.00 <
Minor level: 149.22
Minor level: 147.66
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
The TLT closed at 150.25. The next minor level is 150.78. Two closes above 150.78 and the TLT should move up to 153.13.
The 151.20 area could offer technical resistance. And support is at 149.
Continues to spike on market fears.
GLD:
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
Minor level: 149.22
Minor level: 147.67
Major level: 146.89
Minor level: 146.11
Minor level: 144.54
Major level: 143.75
The GLD closed at 156.09. Watch to see if the GLD can clear the major 156.25 level.
Notably, the GLD got as high as 158.53 before closing just under 156.25.
Momentum remains bullish. However, short term, the GLD is overbought and I would expect a pullback. The 152 area should offer support on a pullback.
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 51.64. The XLE closed under the minor 52.12 level. A close today under this level and the XLE should drop to 50.
51.40 should offer technical support.
The XLE is now just above the lower band on its daily chart. Thay price level is 51.21 and should be support.
AAPL:
Major level: 337.50
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 298.18. Apple close 14.87 to the downside. And it took out the prior pivot low, which was 301.50.
The 314 area should produce resistance. And 296 should offer technical support.
WATCH LIST:
Bullish Stocks: CMG, TSLA, DPZ, MA, COST, NVDAm DXCM, LULU, VRTX, HD, V, CRM, STMP, DG, AXP, ROST, DGX
Bearish Stocks: VRSN, EEFT, W SPR, MNRO, XOM, LNG, NTAP, CREE, CSCO, CCL, R
