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:
GOGOLong at $19.93
Total Premium Collected $1.95
ASNALong at $14.20
Total Premium Collected $0.75
DUST Long $4.50
Total Premium Collected $0.70
SNAPLong at $14.54
Total Premium Collected - $1.65
OILong Feb $19 call @ $1.70
MDRLong @ $9.31
DIS Long Jan 25th $107 Call @ $3.35
DIS Long Jan 25th $107 Put @ $3.10
XLong at $20.30
X Jan 18th - $21.00 Call @ $0.50
RRC Long at $11.85
RRCShort Jan 25th - $12.00 Call @ $0.30
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There is one position that expires today and that is the short $21 call on X. US Steel settled yesterday just above $21. I will send a separate email if we close this position. If you do not receive one, that will mean to leave the position alone.
The S & P 500 ended up closing 19.86 points higher. It closed the day at 2,635.96. And yesterday's high was 2,645.06 which put the market within 10 points of the upside objective we have been looking for.
And the range for the day did expand. The range was 38.70 points which was almost triple the range from Wednesday. But it was still below the average daily range of 46.68 points.
The question yesterday was this. Would the VIX bounce off the midband on the daily chart?
Yesterday, I mentioned that I was concerned about this for two reasons. The first was the contraction from Wednesday and the second was the fact that the VIX was right above the midband.
The S & P 500 had already confirmed a move up to the 2,636.75 level, so the odds did favor a continuation of the upmove.
But we do need to be mindful of the 200 ema for the VIX which is 17.74 and the midband which is 17.08.
If the VIX breaks under these levels, I would expect this rally to continue higher.
Of course, we still need to be mindful of the midband on the daily chart of the S & P 500 which is 2,737.88.
And at this point, the S & P 500 is only 100 points below it.
The question you have to ask is simply this ... did you expect a rally up the midband?
As I have said over and over, the general tendency after price drops below the lower band is for a rally back to the midband.
At this point, I am biased for a sell-off around the midband, But, if the price does clear the midband, it will tell us that there is a very strong likelihood that this rally will continue higher.
This goes back to price expectations. And this is the scenario I am anticipating. Breaking through the midband would be significant.
Scoping out to the weekly price bar, we see that the range through yesterday was 74.65. The weekly average true range is 117.98.
So, for the week, the range is below the average by 43 points.
The midband so far is 2,607.74. And yesterday's close was about 30 points above it.
A close above the midpoint would be bullish. And that is what I expect.
In closing, I do want to mention that yesterday's daily bar had a close percentage of 76% which puts the odds of violating yesterday's high before the low at about 75%.
The support area from yesterday's daily bar is in the 2,623 to 2,626 area. And pre open, the S & P 500 is trading about 12 points higher. This projects to an open around 2,648 or about 3 points higher than yesterday's high. Look for support at yesterday's high and close if the market does pullback.
And finally, the markets are closed this Monday in celebration of Martin Luther King's birthday. There will not be an update on Monday.
NFLX is trading about $8 lower after reporting earnings.
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 18.17 for the day. After getting back above 18.75, the VIX sold off and is now below it.
The next level on the downside is 17.97. Two closes under this level and the VIX should drop to 15.63.
Higher levels should be resistance at this point.
SPX:
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
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
Objective is up to 2,656. And yesterday's high was 11 points of it. With a bullish gap open this morning, we should hit this level.
Watch for possible resistance at the minor 2,675.83 level.
2,625 should offer minor support. And if the market breaks above 2,636, look for a move up to 2,649.
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 163.63. This was the first close back above the 162.50 level.
The next minor level is 164.06. Two closes above this level and the QQQ should move up to 168.75.
163.28 should be minor support and major support should be at 162.50.
The 60 minute chart is very close to crossing into an uptrend. As you know, a bullish crossover will imply higher prices to follow. 159.71 is the midband and should still be support.
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 145.83. This was the first close above the minor 145.31 level. A close today above this level and the IWM should test 150.
142.97 should offer minor support. Like the QQQ, the 60 minute chart is very close to crossing into an uptrend.
144.53 is minor support.
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 120.19, up 0.03 on the day. The TLT closed just under the 120.31 level. It will need to clear this level to move higher.
The daily chart did cross into an uptrend. This suggests that buying the next pullback makes sense.
120.70 is minor resistance and 119.73 is minor support.
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 122.11. In order to drop, the GLD will need two closes under 121.10. Still it has not done that.
121.97 is minor support. And 122.46 is minor resistance.
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 62.57. This was the first close above 62.50.
62.89 is minor resistance. And 61.91 is minor support.
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 87.42. It will need two closes above 88.48 to move higher. And two closes under 86.72 and the FXY should drop.
Still biased for a move lower. The midband is 86.81 and could offer 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 yesterday at 155.86. Biased now for a move up to 162.50.
Starting to look for an entry. 153.91 should be minor support.
Will look to buy calls on the next pullback.
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.
