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
DYN Long at $12.55
Premium Collected $0.48
APA Long Oct $47.50 Call at $3.45
APA Short Oct $52.50 Call at $1.10
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Before I begin today's update, I just want to mention that the you should have been assigned on the short $13 call on AMD on Friday. The result is a gain of 4.3% for slightly over a week.
One of the little known elements in pricing options is the current interest rate. Couple low rates with low volatility and you find that options become relatively inexpensive.
And trying to do weekly covered calls becomes more challenging. The AMD deal carried a decent enough premium to warrant the trade. And quite frankly, when you compare 4.3% for just over a week to the current money market rate, ideally I would look to do one of these each week.
Back to the markets.
The S & P 500 closed out Friday at 2,425.18, up 1.77 for the week. For the week, the S & P 500 formed as inside bar, with a lower high and higher low.
The range for the week was 31.47. This is slightly less than the average true range, which is 35.10. But after the sell off of 44.72 points from the prior week, the fact that the market actually came bakc to close slightly higher show the resilience of this market.
The support level from last week's weekly price bar should be in the 2,420 to 2,423 area.
Quite frankly, we were biased for a bounce based on the fact that I felt that the 12.50 level on the VIX should still offer resistance.
The VIX did peak at 13.05 last Thursday before dropping to close for the week at 11.19.
For the week, the VIX opened at 11.07 and closed at 11.19. Essentially, it ended the week where it began.
But, the fact is that both the S & P 500 and the VIX closed to the upside for the week. By now, you may recognize that this is a divergence.
The last time this happened on a weekly basis was on February 17, 2017. For the next two weeks, the S & P 500 rose almost 33 points.
I am still biased to the upside, but the short term 30 minute chart for the S & P 500 is still in a downtrend, which suggests the market may bounce around before the coming in line with the longer term charts.
Continue to follow the resistance levels.
Here are the Key Levels for the Markets:
$VIX:
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: 9.77
Major level: 9.38
12.50 continued to act as resistance, as anticipated. With a close Friday at 11.19, 11.33 should offer resistance.
A minor level for today is 11.72. A close today under 11.72 and the VIX could retest 9.38 again. However, 10.94 should be support and will need to be violated for the VIX to head down.
$SPX:
Major level: 2,500.00
Minor level: 2,484.38
Minor level: 2,453.12
Major level: 2,437.50 **
Minor level: 2,421.88 <
Minor level: 2,390.62
Major level: 2,375.00
Minor level: 2,359.38
Minor level: 2,328.12
Major level: 2,312.50
The S & P 500 closed above 2,421.88, so it negated the bearish scenario.
2,414.10 and 2,406 should offer support. And 2,437.50 should be resistance.
QQQ:
Major level: 143.75
Minor level: 142.18
Minor level: 139.06
Major level: 137.50 <
Minor level: 135.94 ***
Minor level: 132.81
Major level: 131.25
The QQQ closed above 137.50, at 137.76 on Friday. Look for 135.94 to offer support.
To move higher, the QQQ will need two closes above 139.06.
IWM:
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: 136.72
Minor level: 135.16
The IWM did close above 139.85. 139.84 should be minor support.
141.41 should be minor resistance.
TLT:
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
Major level: 121.88
121.88 should be the objective for the TLT. 121.88 is a key level for the TLT. Two closes under 121.88 and the TLT could drop down to 112 to 115 area.
Watch to see if 121.88 can hold as support, if not expect larger declines.
GLD:
Minor level: 122.66
Major level: 121.88
Minor level: 120.32
Minor level: 119.53
Major level: 118.75
Minor level: 117.97
Minor level: 116.41
Major level: 115.63 <<
Minor level: 114.85
Minor level: 113.28
The GLD hit the 115.63 should be objective. And closed under it, at 115.28.
To move lower, the GLD will need two closes under 114.85. 114.06 is a minor support level. If the GLD cannot break under 114.06, expect a bounce.
XLE:
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
62.50 should be the objective. The XLE did close under 64.06, which should now be resistance.
The major 65.63 level should also be resistance.
FXY:
Minor level: 87.89
Major level: 87.50
Minor level: 87.11
Minor level: 86.33
Major level: 85.94
Minor level: 85.55
Minor level: 84.77 **
Major level: 84.38 <
Minor level: 83.60
Minor level: 83.20
Major level: 82.81
The FXY closed at 84.47. The low of the day took out the 84.38 objective.
To move lower, the FXY would need two closes under 83.60. 83.98 could offer minor support.
The trailing stop I suggested has you locking in profits if you followed the short set up we have been discussing.
AAPL:
Major levels for Apple are 162.50, 156.25, 150, 143.75, and 137.50
Apple reversed and closed at 144.18 on Friday. 143.75 should offer support. And the minor 142.97 level should also offer support.
Short term momentum remains bearish.
WATCH LIST:
Bullish Stocks: PCLN, GS, FDX, BA, STZ, LLL, CMI, CP, MCD, AET, VRTX, MCO, KSU, TSO, VRSN, MTOR
Bearish Stocks: AZO, ORLY, SJM, CASY, CVX, AAP, JACK, DG, SLB, QCOM, TSCO
Be sure to check earnings release dates.