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
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DUST Long $4.50
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AMC Long at $15.27
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UNIT Long at $17
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Today closes out the first month of 2018 and even with this recent sell off, the month should have a bullish close.
And here is why. The high for the month of January is 2,872.87 and low is 2,682.36. This puts the midpoint at 2,777.62.
Even with this recent sell off, the S & P 500 closed yesterday at 2,822.43, which is about 45 points above the midpoint. I bring this up because for a change in trend, you would expect a close below 2,777,62, at the very minimum.
Another way to look at this is the S & P 500 would have to drop at least 45 points today for a bearish monthly price bar to form.
Pre open, the S & P 500 is trading about 12 points to the upside, which would indicate an open around 2,834.
Based on the pre market activity, the market would now have to drop about 57 points for a bearish monthly price bar to form.
Having said that, there are some levels on the upside to be aware of. The midpoint of last week's weekly price, which was 2,840 was violated to the downside. Watch to see if the market can clear this level, because it should offer resistance on the first attempt.
The other key price level is the upper band on the daily chart. That level is 2,828.05 and the market closed under it.
If the S & P 500 can get back above the upper band, the bullish scenario is certainly back. But, it is an important level to watch.
There are two other comments I would like to make.
The first is that short term intra day charts remain bullish for the S & P 500. This indicates the short term momentum is still bullish and you are still better off trying to target the end of the pullback.
And the second comment is that the VIX and S & P 500 diverged on a weekly basis for two consecutive weeks. This often forewarns that a change in direction will happen, even if it is a short term move.
Here are the Key Levels for the Markets:
$VIX:
Major level: 15.63
Minor level: 15.24
Minor level: 14.45 **
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
The VIX closed at 14.86. It was up 7.37% for the day and closed above the 14.45 level. This now implies if the VIX closed above 14.45, it should test 15.63.
The VIX is above the upper band on the daily chart. That level is 14.64. This tells us the VIX is overbought.
$SPX:
Major level: 2,890.60 <
Minor level: 2,871.08
Minor level: 2,832.03 **
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
Friday, the S & P 500 closed at 2,822.43, below the 2,832.03 minor level. A test of 2,812.50 is possible, but I would expect support at that level.
The 2,822.30 is a minor support level that should offer support today.
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
The QQQ closed at 168.70, 5 cents under the major 168.75 level.
168.36 should be minor support.
Like the S & P 500, short term charts are bullish.
IWM:
Major level: 162.50
Minor level: 161.72
Minor level: 160.16
Major level: 159.38
Minor level: 158.60 **
Minor level: 157.03
Major level: 156.25 <
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
The IWM closed at 157.18. A test of 156.25 is possible. And 156 25 should offer support.
Minor resistance should be at 157.81. Short term charts are bullish.
TLT:
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 **
Minor level: 122.27
Major level: 121.88
The TLT closed at 122.01. The TLT should test 121.88 and yesterday's low was 121.70.
Look for a bounce off the 121.88 level.
GLD:
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: 124.22
Minor level: 122.66
The GLD closed at 126.80. A close today under 127.35 and the GLD should drop to 125.
An open under 128.13 and this level should be resistance. This worked as anticipated as the high for the day was 127.92.
126.56 is minor support.
XLE:
Major level: 81.25
Minor level: 80.47
Minor level: 78.91
Major level: 78.13 <
Minor level: 77.74 **
Minor level: 76.95
Major level: 76.56
Minor level: 76.17
Minor level: 75.39
Major level: 75.00
Minor level: 74.61
The XLE closed at 74.80. The upper band is 76.72. So, watch this level on a rally.
The 75 level should offer support. If the XLE can get back above 75, it should offer support.
FXY:
Major level: 89.06
Minor level: 88.87
Minor level: 88.48
Major level: 88.28 <
Minor level: 88.09
Minor level: 87.70
Major level: 87.50
Minor level: 87.31
Minor level: 86.92
Major level: 86.72
Minor level: 86.53
The FXY closed at 88.14, just under the major 88.28 level, again.
The FXY has moved into an uptrend on the daily chart, so if it does pull back here, look to buy against support.
AAPL:
Major level: 178.13
Minor level: 177.35
Minor level: 175.78
Major level: 175.00
Minor level: 174.22
Minor level: 172.66
Major level: 171.88
Minor level: 171.10
Minor level: 169.53
Major level: 168.75
Minor level: 167.97
Minor level: 166.41 **
Major level: 165.63
Apple closed at 166.97. Apple took out 165.63, but reclaimed the level.
A close today above 166.41 and Apple should test 168.75.
WATCH LIST:
Bullish Stocks: AMZN, GOOGL, LMT, BA, SPY, GWW, ALGN, ORLY, NLFX, BDX, LLL, FLT, RTN, DE, VRTX, PANW, CME
Bearish Stocks: SLG, ALK, CHD, SAVE, HA, TLK,
Be sure to check earnings release dates.