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
UNIT Long at $6.78
UNIT Short Feb 21st Call @ $.30
NET Long February $17.50 call @ $1.45
NET Short February $20.00 call @ $0.55
................................................................................
Friday saw the largest daily range since the 92.04 range on August 23, 2019. Friday's range was 67.65 points.
This was over 200% of the daily average true range.
This certainly qualified Friday's daily bar as a long-range candle. The implication of the price bar, along with the 16% close percentage, tells us that the low should be violated before the high.
And that resistance should be at the 3,248.51 level, which is the midpoint.
With a long-range candle, the implication is that price should continue in the same direction.
As it turned out, the long-range candle on August 23rd of last year was not violated before the high. The low held as support.
Will this happen this time?
I don't think so and here is the reason.
The bearish long-range candle on August 23, 2019 has a major technical difference from the candle this past Friday.
That being said, it qualified as a selling climax.
The down to up volume that day read 12.72. And prior to that day, the market had seen three selling climaxes already.
As it turned out, the swing low for the market was in. And the market rallied 555 points from that point. It turned out to be a move of 18%.
The bar from this past Friday had a few major differences. The first and most important being that the down to up volume was 4.91.
A day where the down to up volume is 9 to 1 or more qualifies as a selling climax.
And Friday was not close. The other major factor is that the S & P 500 has sold off against the upper band on its daily chart.
The upper band is 3,356.75, which should be resistance now.
Typically if the market can clear the upper band, I usually expect a retest of it.
Just so you know, the QQQ and the NASD Composite did clear their upper bands. The S & P and the DOW did not.
With a sell-off against the upper band, the target is usually back to the midband. The midband for the S & P is 3,268.
Assuming this happens, it would mean a further drop of another 258 points from Friday's close.
If the tone of the market has shifted, meaning we are now moving into a bearish phase, we would still expect strong bounces in the market.
One thing I do want to point out is the 60 minute chart for the S & P 500 is still in an uptrend. This suggests there should be more selling pressure if the market crosses into a downtrend.
The weekly price bar closed 69.95 points lower. It closed at 13.8% of the range of the bar. This, of course, suggests further selling.
Resistance from last week's weekly price bar is in the 3,236 area. If the price does clear this level, then another resistance level is at 3,254.
In scoping out to January's monthly price bar, what is interesting is that it only closed 5.26 points lower. And it closed below the open.
Resistance from the monthly bar is around 3,235. The next higher level would be 3,276.
I do want to point out that the monthly bar still closed above the upper band on the monthly bar.
The upper band is 3,083. The S & P is still 142 points above the upper band on its monthly chart.
The upper band should be support until it is violated.
Pre open, the S & P is trading about 21 points higher.
Earnings continue this week. This afternoon we will get earnings from GOOGL.
DIS reports tomorrow afternoon. BIDU 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 18.84. This was actually the first close above the major 18.84 level.
This level should be very important for the market. The VIX has now moves up two levels. This would be considered a normal move.
A move up to the next level, which is 21.88 would suggest that we should see higher levels in the VIX.
But, the upper band on the daily chart is 20.83, which we know should be resistance.
And depending upon how the VIX trades at the upper band, they should tell us what to expect.
19.53 should be resistance. Support should be around the 16.40 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 3,225.52. At this point, the key level for the S & P is 3,242.15. If the S & P closes under this level today, the obective should be down to 3,125.
Watch the 3,242 level today.
The projected open should be about 4 points above this level.
Technical resistance is around 3,272.
QQQ:
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
Minor level: 216.43
Major level: 215.65
Minor level: 214.87
Minor level: 213.30
Major level: 212.50
The QQQ closed at 219.07. A close today under 221.13 would suggest a drop to 218.75.
Technical support is at 215.50. And the 221 area should be resistance.
The major 221.91 level 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 160.53. This was the first close under the minor 160.94 level. A close today under this level would suggest a drop to 156.25.
The IWM has already moved into a downtrend on its 60 minute chart. And it is at the lower band, which suggests it is oversold short term.
The midband, which is 165, whould be resistance.
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 145.90. The objective should be up to 146.88.
With the TLT reclaiming 143.75, it should now be support.
The TLT is still overbought short term. It is trading above its upper band on the 60 minute chart. The upper band is 145.60.
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 149.33. The GLD went to within 40 cents of the major 150 level, which is the target.
147.67 should be support.
Technical support is around the 148 level as well.
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 53.44. The XLE dropped to within 4 cents of the major 53.12 level.
The XLE is oversold short term. It is trading under the lower band on the its 60 minute chart.
This does tell us to expect a retest after a bounce. The lower band is 53.75.
AAPL:
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 309.51. The next minor level is 309.38. Two closes under this level and Apple should drop to 303.
The 298 area is the midband on the 60 minute chart and should be support.
The 318 area could provide technical resistance.
WATCH LIST:
Bullish Stocks: TSLA, SHOP, ADBE, PAYC, MCO, DXCM, APD, CME, NOW, RNG, CRM, DECK, MSFT, HSY, LLY, CBOE, WM
Bearish Stocks: ANTM, ALGN, MMM, FDX, AAP, LEA, FFIV, RL, FIVE, EXPE, CVX, ALXN, DLTR, XLNX, CXO, LOPE, FANG, EXPD, EOG
