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
VIPS Long at $11.96
VIPS Short July 28th $12 Call at $.30
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Before I begin today, I want to mention that the short calls on SBH expired on Friday. With SBH settling at 19.85, you keep your stock and book the profit on the calls you sold. Depending upon how SBH trades this week, look for an adjustment to the position this week.
I suspect I can say that history was made on Friday. That is because the VIX not only hit the 9.38 objective, but it actually closed under it. Friday's close was 9.36.
This was the first close under the long term support level of 9.38. The implication for the VIX now is if it closes under 9.38 today, I can foresee a drop to as low as 3.
Should this event happen, it would most likely continue to propel the markets into farther unseen territory. At the very least, I would expect the S & P 500 to hit its current objective, which is 2,500.
But, this level has been a strong support level for many years. In looking at a monthly chart for the VIX, the only time in history that the VIX was under 9.38 was back in December of 2006.
The low at that time was 9.39. After the VIX stopped at 9.39, it ran to a high of 89.53 in October of 2008.
The S & P 500 topped out at 1,576 in October of 2007, about eleven months after the VIX bottomed out.
I should also point out that the market bottomed out in March of 2009, about five months after the VIX topped out.
The point is that even if the VIX does bottom out here, there could be a lag for a major top in the market, assuming that history repeats itself.
I'm not trying to be an alarmist, but I feel it is wise to point out how extreme this VIX reading is.
And today's close should tell us if he VIX will continue down.
For the week, the S & P 500 ending up closing at 2,472.54. The high for the week was 2,477.62, which means it is now within 24 points of the objective.
Based on the bullish weekly bar, I would expect support in the 2,464 to 2,466 area.
And now the short term 60 minute chart has moved into an uptrend. So, now it is aligned with the 30 minute chart, which tells us that the upward momentum should continue.
2,463 is the midband on the 10 minute chart and should be support, if the market does pullback. As this level is right around the support level from last week's weekly price bar, it should be a strong level.
This week we get the FOMC interest rate decision at 2:00 EST on Wednesday. And this week we will get earnings from Facebook on Wednesday. And Amazon on Thursday.
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
We now have had the first close under 9.38. A close under 9.38 today implies further movement to the downside.
Minor support should be at 9.18. And 9.57 should be minor resistance.
$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
2,500 is still the active objective. 2,460.90 should offer minor support.
And 2,484.40 could offer minor resistance.
QQQ:
Major level: 150.00
Minor level: 148.44
Minor level: 145.31 ***
Major level: 143.75 <
Minor level: 142.18
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81
The QQQ closed at 144.11, just above the 143.75 level. To move higher, the QQQ will need two closes above 145.31.
143.75 and 143.55 should be support.
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 closed slightly to the downside, at 142.55. 142.19 is a minor support level and if it breaks under this level, I would expect a drop to test 141.41.
Friday's high was just above the short term 144.53 resistance level.
TLT:
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00 <<
Minor level: 124.61
Minor level: 123.83
Major level: 123.44
Minor level: 123.03
The TLT closed above 125.39 on Friday. A close today above 125.39 and the TLT should test 126.56.
125 should offer support and 126.17 is resistance.
GLD:
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88
Minor level: 120.32
Minor level: 119.53 **
Major level: 118.75 <<
Minor level: 117.97
The GLD will need two closes above 119.53 to move up to 121.88.
119.92 should offer minor resistance and 118.75 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 closed back under 65.63, at 65.11. Short term support is 64.84.
And 65.63 should be resistance. Short term charts have moved into uptrends, so I would expect another rally.
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 86.58, above the 85.94 level. To move higher, the FXY will need two closes above 86.33.
87.50 should still be major resistance. And minor resistance is at 86.72. 86.13 should be minor support.
AAPL:
Major levels for Apple are 153.13, 150, 146.88 143.75, and 140.63.
150 is support. And I would expect minor support at 149.61. 151.56 is minor resistance.
Short term momentum is shifting to the upside. The 60 minute chart is close to moving into an uptrend.
WATCH LIST:
Bullish Stocks: AMZN, AVGO, BA, BDX, BIDU, NFLX, CELG, MA, UHS, LLY, CTXS, RH, CCL, KMX, RAX, NKE, EXPD, KEYS
Bearish Stocks: IBM, GPC, CVS, DXCM, HOG, SIMO, DKS, EAT, GME
Be sure to check earnings release dates.
