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
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
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
WDC Long Feb 15th $40 Call @ $1.96
WDC Short Feb 15th $45 Call @ $0.60
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If you followed the alert yesterday on WDC, you would have added a debit spread that expires with the February monthly options. The risk was limited to about 1% of the nominal portfolio.
The S & P 500 continues to bounce from its oversold condition. For the day, it was up 17.75 points. The S & P 500 closed at 2,549.69.
The close was above the high from last week which was 2,538.07.
This means that the close percentage from last week's weekly price bar of 93.5% has already been achieved.
Let's assume for a moment that Monday was the low for the week. Let's project out based on the weekly average true range was the possible high for the week could be.
The weekly average true range is 98.85 points.
Yesterday's low was 2,524.56. So if we add the weekly average true range to the low, we get 2,623.
2,601 is the high from the bearish long range candle which should still be resistance.
So, it is very close to the weekly projection.
If the market does pullback at this point, I would expect strong support at 2,500.
And more significantly, the S & P 500 had its second consecutive close above 2,519.53 which puts the price objective up to 2,578.10.
I do think that 2,578.10 will be a key level on the upside. If the market can clear this level, I would expect it to continue higher. My preference to confirm a continuation of this bull move would be two closes above 2,597.65.
These resistance levels should help us to confirm if the bull move will continue. Where this rally can possibly fail will be dictated not only by the failure of the market to continue to confirm higher levels but with technical price levels as well.
The key technical price level on the upside will be the midband on the daily chart. That is a price level I will continue to monitor as price does climb. As of yesterday, that price was 2,742.81. It normally acts as resistance when price approaches from below.
I know it may seem morbid to discuss where this rally can possibly fail, but I did want to outline the scenarios I am looking at.
This way we can know in advance where possible pitfalls can come in.
And remember, breaking through these levels will tell us something important as well.
Finally, yesterday's daily price bar closed at 60% of the range which puts the odds of violating yesterday's high before the low right at 60%.
The support area from yesterday's daily bar is in the 2,542 to 2,545 area.
And the support level from last week's price bar, which is in the 2,491 to 2,515 area, should still be valid.
Pre open, the S & P 500 is trading about 20 points higher. This projects to an open around 2,570. And it would be above yesterday's high. So, watch yesterday's high of 2,566.16 as possible support on a pullback.
Continue to monitor the levels as I mentioned above.
Here are the Key Levels for the Markets:
$VIX:
Major level: 28.13
Minor level: 27.35
Minor level: 25.78
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
The VIX closed at 21.40 for the day. For the day, it closed up 2 cents. And with the S & P 500 closing higher along with the VIX, there was a divergence.
The VIX has had two closes under 21.88 which does suggest a drop to 16 and possibly back to 12.50.
Strong resistance should be at 25. Minor resistance is at 22.66.
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 upside objective should be up to 2,578.10. 2,500 should offer strong support. And 2,519.53 should offer minor support.
Also, minor support should be at 2,539.10.
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 158.09. With a close today above 157.81, the objective for the QQQ should be to 162.50.
If the QQQ can make a move up to 162.50, it could indicate this downtrend is over.
156.25 should offer support. And 159.38 is minor resistance.
IWM:
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
Major level: 131.25
Minor level: 129.69
The IWM closed at 139.59. A close today above 139.06 projects to a move up to 143.75.
The IWM will need to move up to the 143.75 level for me to consider this downtrend has ended.
137.50 should be strong support.
TLT:
Major level: 125.00
Minor level: 124.61
Minor level: 123.83
Major level: 123.44 Hit
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 121.75, down 0.36 on the day. The TLT will still need two closes under 121.49 to test 120.31.
The TLT has now crossed into an uptrend on its daily chart.
121.48 is a key minor level on the downside. A close under this level and the TLT should drop.
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 121.86. Watch to see if the GLD can clear the 121.88 level. If it can, I would expect if to head higher.
119.53 should offer support. And 123.44 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 60.76. This now implies that if the XLE can close above 60.16 today, it should test 62.50.
The next level on the upside is 62.50. It should offer resistance, so if the XLE can clear this level, I would expect it to head higher.
58.38 is major 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 close at 87.85. It was down 0.20 on the day. It will need two closes above 88.48 to move higher.
IF the FXY cannot clear 87.89, look for a move down to 87.50 which I believe should 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 down slightly at 147.93. With the bearish gap, we need to monitor the gap levels that could offer resistance.
The midpoint of the gap is 150. And the low of the gap is 154.23.
These are possible areas where resistance could come in. And with the resistance level at 150, this is an area to watch.
Minor support is at 145.31.
WATCH LIST:
Bullish Stocks: HLF, GCO, AHL, NLY, AGNC
Bearish Stocks: ADBE, MMM, ALGN, BIDU, ASML, BABA, LGND, UPS, TXN, GRUB, ALB, SWKS, AKAM, AABA, CERN
Be sure to check earnings release dates.