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
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ASNA Long at $14.20
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DUST Long $4.50
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SNAP Long at $14.54
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OI Long Feb $19 call @ $1.70
MDR Long @ $9.31
TEVA Long at $15.30
TEVA Short Jan 4th-$15.50 Call @ $0.45
DIS Long Jan 25th $107 Call @ $3.35
DIS Long Jan 25th $107 Put @ $3.10
X Long at $20.30
X Jan 18th - $21.00 Call @ $0.50
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You should have closed out the spread on WDC on Friday. The result was a small profit for a few days. For this week, there is one position that expires and that is the short $21 call on X that expires this Friday. You will receive an alert if the position is adjusted.
Friday, the market stalled closing 0.38 points lower. It closed at 2,596.26. And the range contracted. The range for the day was only 18.87 points as compared with the average true range which is now 66.10 points.
So, the actual range was about 30% of the average.
This contraction warns of a possible change in direction. And it usually indicates that an expansion will follow.
Both Thursday and Friday closed just under the next minor level to the upside which is 2,597.65. Thursday's close was 2,596.64 and Friday was 2,596.26. So, for two days, the S & P 500 stalled just under the next upside confirming level.
It is not unusual to see the market stall at next upside level after breaking through a major price level.
And at this point, the S & P 500 has run three levels off the low.
This rally began just under the major 2,375 level and cleared the major 2,578.10 level.
I do feel that closing over 2,578.10 was significant. And the fact that the market managed to move up three levels from the lows. Usually, a counter-trend move will move only two levels.
Based on these swings, we can make some predictions about the market.
But before I get into that, let me mention that the market is trading around 24 points lower. This would project to an open around 2,572.26 or about 5 points under Friday's low.
This would suggest that support levels from Friday will be resistance. These levels are 2,586 to 2,592.
If we scope out and look at last week's weekly price bar, we see that it had a close percentage of 97.9%. This suggests that odds favor violating last week's high before the low.
And the support level from the weekly price bar is in the 2,561 to 2,566 area.
Watch to see how the market reacts around these levels.
As for the prediction, because the market managed to close above 2,578.10, I would expect support to come in at 2,500.
If that level cannot hold, then I would expect 2,437.50 to.
This week we start to get earnings reports. We will hear from most of the major banks this week including Goldman Sacks which reports on Wednesday.
And Thursday, we will hear from Netflix.
Continue to monitor the levels as I mentioned above.
Here are the Key Levels for the Markets:
$VIX:
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
The VIX closed at 18.19 for the day. Friday took out the 18.75 level which we were looking for.
Watch the 17.97 level. A close today under this level and the VIX should drop to 15.63.
17.19 is minor support.
SPX:
Major level: 2,656.30
Minor level: 2,636.75
Minor level: 2,597.65 **
Major level: 2,578.10 <
Minor level: 2,558.58 **
Minor level: 2,519.53
Major level: 2,500.00
Minor level: 2,484.38
Minor level: 2,453.13
Major level: 2,437.50
Minor level: 2,421.88
The market projects to open under the major 2,578.10 level. Support should be at the minor 2,558.58 level. And if that cannot hold, look for support around 2,539.10.
To move down to 2,500, the S & P 500 will need two closes under 2,558.58.
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: 154.69
Minor level: 151.56
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
The QQQ closed at 160.69. At this point, a close today under 160.94 and the QQQ should test 156.25.
A break under 159.38 and I would expect the QQQ to drop to 156.
Like the S & P 500, the 30 minute chart is bullish and the 60 minute chart is bearish. However, price is still trading above the midband on the 60 minute chart which is now 159.79.
IWM:
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75 <
Minor level: 142.19
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81
The IWM closed at 143.68. The IWM did take out the 143.75 objective. It took it out by 24 cents.
Support should come in at 140.63. If that cannot hold, I would expect 137.50 to hold.
And technical support is right around 136.
TLT:
Major level: 125.00
Minor level: 124.61
Minor level: 123.83
Major level: 123.44
Minor level: 123.05
Minor level: 122.27
Major level: 121.88 <
Minor level: 121.49 **
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
The TLT closed at 120.93, up 0.47 on the day. 120.70 is a micro support level. If the TLT breaks under 120.70, I would expect it to drop to 120.31.
I don't see the TLT breaking under 119.53 on this drive.
GLD:
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: 117.97
Minor level: 116.41
Major level: 115.63
The GLD closed at 121.80. Watch to see if the GLD can clear the 121.88 level. If it can, I would expect if to head higher. And the GLD continues to struggle to break through 121.88.
123.44 should be resistance. And support should be at 120.31.
XLE:
Major level: 68.75
Minor level: 67.97
Minor level: 66.41
Major level: 65.63
Minor level: 64.85
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
The XLE closed at 62.01. The high for the day came within 10 cents of the 62.50 level.
Clearing 62.50 would be bullish. But, at this point, it is resistance.
60.06 is major support. And resistance is at 64.06.
FXY:
Major level: 89.84
Minor level: 89.65
Minor level: 89.26
Major level: 89.06
Minor level: 88.87
Minor level: 88.48
Major level: 88.28 <<
Major level: 87.50 <
Major level: 86.72
Major level: 85.94
Minor level: 85.75
Minor level: 85.36
Major level: 85.16
Minor level: 84.97
The FXY closed at 87.97. It closed down 0.10 on the day. It will need two closes above 88.48 to move higher.
The FXY will still need two closes above 88.48 to move higher.
87.50 is a key level for the FXY. I would expect strong support at 87.50. And 87.89 is minor support.
AAPL:
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: 159.38
Minor level: 153.13 **
Major level: 150.00
Minor level: 146.88
Minor level: 140.63
Major level: 137.50
Apple closed at 152.29. 150 should now be support. A break under 150 and Apple could drop to the lower band which is 131.
154.69 is resistance on the upside.
WATCH LIST:
Bullish Stocks: CMG, REGN, VRTX, CRM, KMB, WIX, DG, ZEN, THS, FN, FL, CF, ROKU, CIEN
Bearish Stocks: BKNG, PODD, UN, UL, IBKR, WTW, CAG, STZ
Be sure to check earnings release dates.