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
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SNAP Long at $15.20
Short Jan 12- $15.50 Call @ $0.31
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AMC Long at $15.27
Short January $16 Call @ $0.27
Premium Collected - $2.25
UNIT Long at $17
Short January $17.50 Call @ $0.35
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Just as it appears that the market may pullback, it finds support and reverses to wipe out most of the losses on the day.
The S & P 500 gapped down at the open and dropped to a low of 2,736.06.
The low happened to be 1.66 points above the major 2,734.40 level, which should act as support once it is violated.
The S & P 500 ended up closing at 2,748.23. This is still below the next upside objective, which is 2,753.93. The S & P 500 still needs two closes above 2,753.93 for the active objective to be 2,812.50.
This sell off was prompted again by the divergence between the VIX and the S & P 500.
Both the 30 and 60 minute charts for the S & P 500 remain in uptrends and with this formation, you are better off buying the oversold condition as opposed to trying to short the market.
I mentioned this concept on yesterday's webinar and yesterday's intra day price action was a great example of that.
With both the 30 and 60 minute charts in uptrends, the best way to enter long the market is to scale down to a 10 minute or even a 3 minute chart and buy the oversold condition.
By scaling down to a 3 minute chart, you could have entered around the low of the day around 10:00 AM EST. And the price at that time was just above the major 2,734.40 support level.
Pre open, the S & P 500 is trading about 4.50 points higher. Based on this, the market should open around 2,752. Watch to see if it can clear the 2,754 level.
Also, support should be in the 2,743 area.
Here are the Key Levels for the Markets:
$VIX:
Major level: 14.06
Minor level: 13.67
Minor level: 12.89
Major level: 12.50
Minor level: 12.11
Minor level: 11.33
Major level: 10.94 **
Minor level: 10.55
Minor level: 10.16 <
Major level: 9.38
Minor level: 8.99
Minor level: 8.20
Major level: 7.81
The VIX close at 9.88. The VIX hit a high of 10.85 before selling off to close under 10.16.
The high for the day was just under the 10.94 resistance level.
Look for resistance at 10.55.
$SPX:
Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93 **
Major level: 2,734.40 <
Minor level: 2,724.23
Minor level: 2,705.07
Major level: 2,695.30
Minor level: 2,685.55
Minor level: 2,666.05
Major level: 2,656.30
Minor level: 2,646.53
If the S & P can clear the minor 2,749 level, I would expect it to offer support.
To move higher, the S & P 500 will need two closes above 2,753.93.
The major 2,734.40 level should offer support.
QQQ:
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: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.34
Minor level: 150.78
Major level: 150.00
The QQQ closed at 162.18. Two closes above 164.06 and the new objective becomes 168.75.
156.25 should be strong support for the QQQ. And minor support should be at 160.94.
IWM:
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: 147.66
Major level: 146.88
The IWM closed at 154.84. At this point, I would expect strong support at 150. And watch to see if the IWM breaks under 153.13.
154.30 is minor support. Watch to see if this level holds as support.
TLT:
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: 124.61 **
Minor level: 123.83
Major level: 123.44
Minor level: 123.05
The TLT closed at 123.80. I would expect a retest of 123.44.
124.61 should be resistance. And minor support is at 122.66.
GLD:
Major level: 128.13
Minor level: 127.35
Minor level: 125.78 **
Major level: 125.00 <
Minor level: 124.22 **
Minor level: 122.66
Major level: 121.88
Minor level: 121.10
Minor level: 119.53
Major level: 118.75
Minor level: 117.96
The GLD closed at 125.03. 125 is a key level for the GLD. A straddle could be the strategy at the moment.
A failure and the GLD could drop to 112. A breakout and the GLD could run to 137.
To move lower, the GLD will need two closes under 124.22. To move higher, the GLD will need two closes above 125.78.
XLE:
Major level: 76.56
Minor level: 76.17
Minor level: 75.39 **
Major level: 75.00 <
Minor level: 74.61
Minor level: 73.83
Major level: 73.44
Minor level: 72.66
Minor level: 71.09
Major level: 70.31
Minor level: 69.92
The XLE closed at 75.14. It continues to hold the major 75 level.
The XLE is above its upper band on the daily chart. The upper band in 75.09. The XLE is overbought in the short term. A break under 75 and the XLE could drop to 72.
FXY:
Major level: 86.72
Minor level: 86.53
Minor level: 86.14
Major level: 85.94
Minor level: 85.75
Minor level: 85.36 **
Major level: 85.16 <
Minor level: 84.96
Minor level: 84.55
Major level: 84.38
The FXY closed at 86.17, taking ouot the 85.94 level. A close today above 86.14 and the FXY should test 86.72.
85.94 should offer support. 86.72 could offer minor resistance.
AAPL:
Major levels for Apple are 175, 171.88, 168.75, 165.63, 162.50, and 159.38.
Apple closed at 174.29, just under the 175 level.
Two closes above 175.78 and Apple should test 178.13. 173.83 should be minor support. 173.44 should offer support.
WATCH LIST:
Bullish Stocks: AMZN, GOOGL, BIIB, LMT, HUM, DIA, BIDU, HD, FB, AMGN, SWK, LH, DE, VRTX, PANW, NSC, COL
Bearish Stocks: SLG, EPR, HCN DXCM, AIV, HTA
Be sure to check earnings release dates.
