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
SNAP Long at $14.54
Total Premium Collected - $1.65
OI Long Feb $19 call @ $1.70
MDR Long @ $9.31
RRC Long at $11.85
Total Premium Collected $0.30
FEYE Long at $16.70
FEYE Short Feb 1st - $17 Call @ $0.40
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Friday, the short $12 call on RRC expired. The profit of 30 cents per share has been booked. Because the options were not assigned, the stock remains on the books and it frees the position up to sell more calls.
You should have also closed the long $107 call on DIS. The calls had value but not enough to offset the cost of the puts. If you traded the suggested 2 lot, the cash loss was about $390 per straddle.
Friday, the S & P 500 ended up closing 22.43 points higher. It closed out the week at 2,664.76.
The intra day range ended up being only 15.05 points. But, a lot of the move happened overnight. The open gapped up 15.11 points higher than Thursday's close. The gap was 10.24 points higher than Thursday's high.
This type of price action off the open can be tricky to trade intra day.
After the market opened, it raced up to a high of 2,672.38 before trading mostly lower to flat the balance of the day.
The high came in right around 11:00 EST which is an important intra day turning point.
In fact, I had a friend who called me Friday morning and told me he bought some QQQ calls and was thinking about booking his profit after the gap. I told him to just hold and close around 11:00 AM EST, if he saw price starting to stall.
He was able to capture the bulk of the intra day move by closing around 11:00 AM.
This is what can make intra day trading tricky. Had you gone long on Thursday like my friend, you can be looking to close the position after the gap.
If you didn't, you tend to chase the move intra day. And the intra day range ended up being only 15.05 points.
When you look at some of the intra day ranges we have had, 15.05 points is a major contraction.
But, the S & P 500 did manage to close above the major 2,656.30 level.
And the high for the day came within 65 points of the midband which is 2,734.58.
As I have said before, I am still biased for a test of the midband.
But, I don't like to see narrow range trading accompanied with a bull gap.
Today's price action should tell us whether this move continues or reverses.
A break above the high and the market should most likely continue higher. A break below the low and we could see a pullback.
Friday's high was 2,657.33 and the low was 2,672.38. In addition to the close of 2,664.76, these are the levels to monitor today.
As I mentioned before, I am still biased for a continuation of the bull move. This is because both the short term 60 minute chart and 30 minute chart are in uptrends.
I would expect technical support around 2,584 if the market does pullback.
As for the weekly price bar, the market actually closed 5.95 points lower. And the range was only 59.52 points.
Compared with the weekly average true range of 120.15 points, the range for the week was only about one half of the average.
The close for the week was right around the open which can be bearish. But it did close at 87.2% of the daily price bar.
So, the close percentage does put the odds in favor of violating last week's high before the low.
Last week's high was 2,657.88 and the low was 2,612.86. The weekly support level should be around 2,643.
Earnings continue this week. Tomorrow after the close, we will hear from Apple, and Boeing before the open on Wednesday.
And Wednesday afternoon after the close, we will get Tesla.
And Thursday afternoon, we will hear from the last of the high profile companies to report this week. That is when we get earnings from Amazon.
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 continued to drop, closing at 17.42, down 1.47 on the day. This was the first close under 17.97. This now implies that if the VIX does close under 17.97 today, it should drop to 15.63.
Having said that, the close on Friday of 17.42 was just above the midband on the daily chart. That level is now 17.23.
We have to be mindful that 17.23 could offer support.
Another way to look at this is that the VIX will need to break under 17.23 to head lower.
At this point, 18.75 and 17.97 should act as resistance.
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
2,636.75 should now be a minor support level. Friday did close above the major 2,656.30 level.
At this point, the S & P 500 will need two closes above 2,675.83 to move up to 2,734.40. And to move lower, two closes under 2,597.65.
The S & P 500 is trading about 10 points lower pre open. This projects to an open around 2,655 or about a point under the major 2,656 level.
Minor support should be at 2,648.90. Watch to see if this level holds.
QQQ:
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
The QQQ closed at 165.15. A close today above 164.06 and the QQQ should test 168.75.
Like the S & P 500, the 60 minute chart for the QQQ is in an uptrend. Technical support should be at 159.54.
163.28 should offer minor support.
IWM:
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
Minor level: 142.19
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81
The IWM closed at 147.34. The objective for the IWM is still to 150.
The IWM will need to clear 147.66 to move up to 150. Minor support is at 146.
And 141 should be technical support for the IWM.
TLT:
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
Minor level: 118.14
Major level: 118.75
Minor level: 117.97
Minor level: 116.41
Major level: 115.63
The TLT closed at 120.53. The TLT will still need two closes above 120.70 to move up to 121.88.
At this point, minor support is at 120.31 and Friday's low came to 120.32.
If the TLT breaks under 120.32, look for it to head lower.
The next minor support level on the downside is 120.12. Two closes under this minor level and the TLT should drop to 119.53.
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 122.86. With a close today above 122.66, the GLD should test 125.
123.44 could offer minor resistance. If the GLD cannot clear 123.44, I would expect it to drop. Watch to see if the GLD can clear this level.
XLE:
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
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
The XLE closed at 62.93. The XLE managed to close just above the major 62.50 level.
To move higher, the XLE needs two closes above 63.28.
62.50 should be support. And minor support is at 59.38.
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 87.19. Deciding where the next minor move should go.
I am biased to the downside but the FXY will need to take out the midband on the daily chart.
That level is 86.82 and the FXY is sitting right on the midband.
Wait for price confirmation in either direction. A break under the midband would suggest lower prices to follow. And if the midband holds, I would expect another upleg.
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 157.76. Looks like we will not get the test of 150.
At this point, 153.13 should offer support. The 159 area should offer technical resistance.
The 60 minute chart is close to crossing into an uptrend. The conservative entry would be to enter long after the 60 crosses into an uptrend.
WATCH LIST:
Bullish Stocks: CMG, REGN, AVGO, WDAY, EW, VRSN, VMW, VRSK, XLNX, CHKP, WIX, YUM, CNI, NKE, SQ, WELL, ZEN
Bearish Stocks: FFIV, WB, DOX, QCOM, SIG, BITA
Be sure to check earnings release dates.