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
RRC Long at $11.85
Total Premium Collected $0.70
RRC Long at $9.20
RIG Long at $8.81
Premium Collected - $1.45
FEYE Long at $17.18
Total Premium Collected $1.06
FEYE Short Jan 17th - $19 Call @ $0.26
DBX Long at $17.18
DBX Short Jan 31st-$17 call @ $0.70
X Long at $11.33
X Short Jan 10th - $11.50 call @ $0.35
NET Long at $17.09
NET Short Jan 17th - $17.50 call @ $0.55
FDX Long Jan 17th - $150 Put for $3.05
FDX Short Jan 17th - $145 Put for $1.37
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The market melt-up continues. Yesterday reversed the selling from Tuesday, with the S & P 500 closing 15.87 points higher.
The day closed out at 3,253.05.
And yesterday's low stopped at 3,236.67. The low was about the midpoint of the weekly price bar support area. As I mentioned yesterday, that area is in the 3,235 to 3,237 area.
The daily range also expanded, with a daily range of 30.40 points. The range was about 140% greater than the daily average true range, which is 21.25.
The day closed out at 54% of the daily bar, based on late day profit-taking.
The support area from yesterday's daily price bar is in the 3,246 to 3,251 area.
Yesterday's high went to 3,267.07. So this puts the S & P 500 to within 14 points of the 3,281.20 objective.
The big news this morning is the announcement that the first phase of a trade deal with China will be executed. This is driving the S & P about 11 points higher pre-open.
If this trading holds up until the open, it would mean the S & P would be within 3 points of the objective we have been looking for.
The question at that point is, what should be expected next?
If the S & P can clear the 3,281.20 level, the next level that should offer resistance would be the 3,320.25 level.
The bullish percent index still remains overbought and now reads 79.20%.
An extreme reading would be over 80% and this indicator is within 1 point of it.
But, as I have mentioned in the past, the market can remain overbought a lot longer than our ability to try and short a top. This was the scenario back in 2000 with the market continuing to run higher, regardless of the technical readings.
For a meaningful reversal to occur, we would expect a spike in the VIX and we have just not had that at this time.
I do want to mention that the upper band on the daily chart is 3,307.89 and this is just below the next minor level above the 3,281 target.
The upper band creates a few scenarios that I will continue to review as the market gets close to it.
Earnings season should begin in earnest next week.
Pre open, the S & P is trading about 11 points higher.
Here are the Key Levels for the Markets:
$VIX:
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
Minor level: 14.85 **
Minor level: 13.28
Major level: 12.50
Minor level: 11.72
Minor level: 10.16
Major level: 9.38
The VIX closed Friday at 13.45. Yesterday's low did not quite hit the 12.50 level. The low stopped at 12.83.
The high did clear 14.85, but quickly sold off to under it.
The 14.85 area should still be technical resistance. It should be resistance.
Watch the minor levels for the VIX as well today. And watch the 14 level.
SPX:
Major level: 3,281.20 <
Minor level: 3,242.15 **
Minor level: 3,164.08
Major level: 3,125.00 <
Minor level: 3,085.95
Minor level: 3,007.85
Major level: 2,968.80
Minor level: 2,929.73
Minor level: 2,851.58
Major level: 2,812.50
Minor level: 2,773.45
The S & P closed at 3,253.05. Look for the major 3,281.29 level to be tested today.
Watch how the market reacts at the objective.
3,125 should still be support.
The bullish percent index remains overbought, but at this point, we have not had a spike in the VIX. Technicals remain bullish for the market.
Technical support is still at 3,234.
QQQ:
Major level: 218.78
Minor level: 218.00
Minor level: 216.43 **
Major level: 215.65 <
Minor level: 214.87
Minor level: 213.30
Major level: 212.50
Minor level: 211.74
Minor level: 210.17
Major level: 209.39
Minor level: 208.61
Minor level: 207.04
Major level: 206.25
The QQQ closed at 217.15. The QQQ made the run to 216.43 and closed above it. A close today above it and the QQQ should test 218.78.
Support should now be at 215.65.
And the 215 area should offer technical support. Minor resistance should be at 219.
IWM:
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 IWM closed at 165.31. The objective for the IWM should be up to 168.75.
The 164.06 level should offer support.
The 165 area should offer technical resistance. This level should hold.
TLT:
Major level: 143.75
Minor level: 142.97
Minor level: 141.41
Major level: 140.63
Minor level: 139.85
Minor level: 138.28
Major level: 137.50 **
Minor level: 135.84
Minor level: 132.81
Major level: 131.25
The TLT closed at 136.74. At this point, if the TLT has two closes under 135.84, it should drop to 131.25.
The 137 area should be technical resistance.
Short term charts remain bearish.
GLD:
Major level: 150.00
Minor level: 149.22
Minor level: 147.67 **
Major level: 146.89 Hit
Minor level: 146.11 **
Minor level: 144.54
Major level: 143.75
Minor level: 142.97
Minor level: 141.41
Major level: 140.63
Minor level: 139.85
Minor level: 138.28
Major level: 137.50
The GLD closed at 146.86. 147.67 should be resistance.
We expected a pullback based on the GLD being overbought short term.
The upper band on the 60 is 147.79 and the GLD broke under it. Expect a retest and watch to see if the GLD can clear it. If it can't, look for the GLD to continue lower.
137.50 should be strong support. So if the GLD does break under it, I would expect it to head lower.
The key level is 134.38 on the downside. If the GLD has two closes under this level, it could drop to 125.
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
Minor level: 55.86
Minor level: 55.08
Major level: 54.69
The XLE closed at 59.71. The objective should be up to 62.50.
Watch for support at the 59.38 level.
Technical support is still around 59.
AAPL:
Major level: 300.00 Hit
Minor level: 296.88 **
Minor level: 290.63
Major level: 287.50
Minor level: 284.38
Minor level: 278.13
Major level: 275.00
Minor level: 271.88
Minor level: 265.63
Major level: 262.50
Apple closed at 303.19.
Apple is overbought and right at the upper band. Not a time to go long. The upper band is now 303.87. Watch to see if Apple can clear it.
296.88 should offer support. And minor support is at 290.63.
The 295 area should offer technical support.
WATCH LIST:
Bullish Stocks: TSLA, NOC, ROP, ADBE, NTES, MA, AAPL, LRCX, NOW, GS, RTN, BABA, LHX, FB, MCD, DE, COUP, CB
Bearish Stocks: ALXN, TSCO, SQ, CLB, UFS, QGEN, MAC, BEN
Be sure to check earnings release dates.