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
SBH Long at $19.20
SBH Short July $20 Call at $0.30
..........................................................................................
On yesterday's webinar, one of your fellow members posed a question that I thought was incredibly pertinent to what is happening in the market at the moment.
I will attempt to paraphrase his question.
The question he asked was essentially this ... "If the S & P 500 hits the 2,500 level, do you see a major pullback or bear market coming?"
I believe I have stated the major gist of his question.
The first thing that made me curious was his choice of the word "if". It was interesting that he used "if" and not "when".
I say that because if you have been a reader of this update for an extended period of time, you no doubt recognize that EVERYTIME I have stated when a new upside objective is active, that target has been achieved.
It may not have been hit the first time it was attempted, but the market ultimately came back to hit the objective.
Quite frankly, I do feel that my unique way of determining if a move will continue or not, is something that no other publisher can do and even has the knowledge of how to do.
One of the other advantages of how I look at the market is that we know in advance how far down the market should go assuming a bull market is to be maintained.
If certain levels are exceeded, that tells us the temperature of the market is changing.
In other words, in a healthy bull market, we know that pullbacks should generally not exceed two levels in the opposite direction.
This exact scenario played out on the FXY when I mentioned it should reverse at around 88 last month.
But I digress.
Back to where this market can go after 2,500.
Now that the market is within 25 points of the objective, it does not seem all that far fetched. And I do recall mentioning a while ago, that I felt that the 2,500 level is where the market wants to go.
The key as to what the market will do next, hinges on whether it can clear 2,500, and by how much.
I believe if 2,500 is exceeded, it sets up a scenario where that level will be retested after a pullback. And I would not expect any pullback to exceed 125 to 130 points.
The next major level above 2,500 is 2,539. If the S & P 500 can close above 2,539 for two days, it should test 2,656.30.
The level after 2,656.30 is 2,812.50. That is the level I feel would be difficult to get through on the first attempt. 2,656.30 should also offer strong resistance.
The key to the continuation of the bull move is the VIX. The VIX is down to the all time low support level of 9.38.
The question now is whether the VIX can close under 9.38 for two days. If it can close under 9.38, then I feel the VIX could drop to as low as 3.
This event would most certainly confirm the continuation of the bullish move for the market.
But, the VIX could just continue to bounce around and not spike up above 15.63 and the market could continue up as well.
The real key in sharing this information is how you can take advantage of the information. I know that members apply this analysis in different trade strategies depending upon what they like to trade.
For example, when the market stops at a support level, they will put on put credit spreads.
I hope this has been helpful, but you if have any questions at all, you can email me directly. And if you apply this information to your own trading style, please feel free to email me and let me know what you do.
If you agree to it, I would share it with other members.
My direct email is davismdt@gmail.com.
Continue to follow the resistance levels.
Here are the Key Levels for the Markets:
$VIX:
Major level: 18.75
Minor level: 17.97
Minor level: 16.41
Major level: 15.63
Minor level: 14.84
Minor level: 13.28
Major level: 12.50
Minor level: 11.72 <
Minor level: 10.15
Major level: 9.38
The VIX closed at 9.78, under the minor 10.15 level. Expect 11.72 to be resistance.
9.38 is a key level for the VIX. Watch to see if it holds.
$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
2,460.90 should now be support. Look for minor resistance at 2,484.84.
2,468.80 should also still offer support. Getting a bit overbought short term.
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
Target hit! I said it again. But, we were looking for a move up to 143.75.
145.31 is minor resistance.
Minor support is at 142.97.
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 is within 65 cents of the 143.75 objective.
142.19 should offer support.
TLT:
Major level: 125.00 <<
Minor level: 124.61
Minor level: 123.83
Major level: 123.44
Minor level: 123.03
Minor level: 122.21
Major level: 121.88
The TLT hit it's objective of 125. The high for the day was one cent above it.
This level should be resistance. 125.78 should be minor resistance and 123.44 support.
Low risk trade opportunity at the moment.
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 closed at 118.08. It continues to inch up to the 118.75 objective, which should offer resistance.
117.97 should offer minor support and 120.31 should be resistance.
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
The XLE took out 65.63, closing at 65.96. It will need two closes above 66.41 to move up to 68.75.
Watch the 66.41 level today. If it gets through this level, it should head higher. If ti can't a minor pullback should happen.
65.23 should offer support.
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 will need two closes above 86.33 to move higher.
86.33 is minor resistance. And 85.94 should be minor support.
AAPL:
Major levels for Apple are 153.13, 150, 146.88 143.75, and 140.63.
A close today above 150.78 and Apple should move up to 153.13.
150 is support.
Short term momentum is shifting to the upside.
WATCH LIST:
Bullish Stocks: PCLN, LMT, NOC, HUM, GS< FDX, BDX, BA, STZ, AMGN, RTN, LLL, RTN, CMI, FB, AET, RHT, WDC, SMG, KSU, AXP, DD
Bearish Stocks: JACK, PAYX, ROST, SIMO, EAT, BGS, RBA, SCG
Be sure to check earnings release dates.
