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
Short Jan 8th-$21 Call - $.40
NCR Long Jan 16 $27 Call
Net Debit - $.80
X Long at $14
Total Premium collected - $.89
ASNA Long at $14.20
Total Premium collected - $.75
ETE Long $14.05
Total Premium collected - $1.05
Short Jan 8th-$13.75 Call
P Long $13.38
Short Jan $14 Call - $.35
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As if this market isn't volatile enough, there are reports out of North Korea of the successful test of a hydrogen bomb.
This has sent the markets reeling before the open, with the S & P 500 off almost 35 point and the DOW down close to 300.
Let me make a quick point about this type of action.
When you see swings of these magnitudes, none of the traditional technical tools to measure the markets will be reliable.
Especially if there is panic.
I suspect the only good news is that the markets have not had a flash crash ... at least not yet.
Assuming the markets open down about 35 points, it will put the S & P 500 under the lower extreme bollinger band on the 60 minute chart.
That level is 1,989.58.? An open 35 points lower would be around 1,980.
This would mean the markets would be tremendously oversold and a bounce would not be unexpected.
To help time the bounce, you need to watch the VIX and see if it reverses off a resistance level.? The VIX closed yesterday at 19.34, which is under the 23.44 minor level.
Resistance on the VIX should be at 23.44 and 25 and at the upper band on the 60 minute chart, which is 23.87.
Assuming the VIX heads above the upper band, I would expect another run back to the top.
As a final comment, assuming an open under the extreme band on the S & P 500, it will retest the bottom band at
some point.
Here are the key levels for the markets.
?
VIX:?
Major level - 25.00
Minor level - 23.44
Minor level - 20.31
Major level - 18.85
Minor level - 17.19
Minor level - 14.06
Major level - 12.50
Watch where the VIX opens today and if it can break through 23.87.? If it fails at that level or one of the resistance levels, look for the markets to bounce.
S & P 500 Cash Index:?
Minor level - 2,054.68
Minor level - 2,039.10
Major level - 2,031.30
Minor level - 2,023.48
Minor level - 2,007.82
Major level - 2,000.00
Minor level - 1,992.18
Minor level - 1,976.52
Major level - 1,968.70
The S & P 500 will no doubt open lower.
It did close above 2,007 yesterday, so a close above that level would mean a push higher.
1,989.58 is a key downside support level, which is the lower band on the 60 minute chart.
The downside confirming line is 1,992.18, so two closes under that level and the S & P 500 should drop to 1,968.70.
Nasd 100 (QQQ):?
Major level - 115.63
Minor level - 114.85
Minor level - 113.28
Major level - 112.50
Minor level - 111.72
Minor level - 110.16
Major level - 109.38
Minor level - 108.60
Minor level - 107.03
Major level - 106.25
Objective should be to 106.25.
Lower extreme band is 108.57.
TLT:?
Major level - 125
Minor level - 124.22
Minor level - 122.66
Major level - 121.88
Minor level - 121.09
Minor level - 119.53
Major level - 118.75
Minor level - 117.97
Minor level - 116.40
Major level - 115.62
If the TLT can close for two days above 122.66, it should move up to 125.
The TLT will get a bounce this morning, however the 122.66 level has been strong resistance.
GLD:
Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13
Minor level - 102.34 *
Minor level - 100.78
Major level - 100.00
Major level - 96.88
The GLD finally had a close above 103.13.
If it can close above that level today, I will get interested in the gold minors.
Next level up is 103.91.? Two closes above that level and the GLD should move up to 106.25.
XLE:
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 is down to 59.27 pre open.
Resistance should now be at 60.16.
Two closes under 59.38 and it should drop to 56.25.
Apple:
Major levels for Apple are 125, 118.75, 112.50, 106.25, 100, and 93.75.
106 should be a major support level for Apple.?
Apple is down over $2 before the open to just above $100.
This is a key level for Apple because it is around the bottom band on the daily and the 60 minute charts.
If it takes out the bottom band on the daily, I would expect lower lows to follow.? If it holds, it could be a great opportunity.
Wait to see how it reacts.
Watch list:
Bullish Stocks: NOC, FSLR, OQ, EXR
Bearish Stocks: CMG, CXO, SLB, AAPL, ZBRA, CFR, WSM, KEX, JWN, RY, MGA, KORS, RH
Be sure to check earnings release dates.
