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
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DYN Long at $12.55
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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 $0.30
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Yesterday, the S & P 500 managed to close slightly higher. It closed at 2,477.83, up .75 on the day.
The high for the day was 2,481.69, within 20 points of our objective.
It also appeared that the VIX would close under 9.38. It dropped to a low of 8.84, before it managed to rally to close at 9.60.
So, for the VIX to move lower, it still needs two closes under 9.38.
On the Mad Hedge Fund Trader webinar yesterday, John asked me where I felt the market would go. Of course, I stated that our objective is the 2,500. And it has been for a while now.
How the S & P 500 trades at the 2,500 level will tell us a lot as to what the next move for the market will be.
Here is what I mean.
If the S & P 500 breaks through 2,500, it will tell us that the market should retest the 2,500 level if it should fall below it. And the market should bounce before any serious correction.
The next level above 2,500 is 2,578 and then 2,656. I would expect strong resistance at 2,656.
But, with the VIX at all time lows, a rally in the VIX could be the expected. That is why the critical 9.38 level on the VIX is so important at the moment. Should the VIX close for two under 9.38, I do expect it to go lower.
And pre open, the market is set to open higher, so no doubt the 9.38 level should be tested again today.
The question now is do you consider shorting the market? I know I have been strong advocate of not doing that. And have been for a while now.
I think the answer is patience. Wait to see if the S & P 500 can get through 2,500.
Short term charts still remain bullish, so momentum is expected to continue higher.
If the S & P 500 stalls and the VIX reverses to the upside, a short could be warranted. But, I would not do a straight out short. I would straddle or strangle the market. This way if the shorts get squeezed and the market makes a fast run up, you can capture that gain as well.
Continue to follow the resistance levels.
Here are the Key Levels for the Markets:
$VIX:
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 <
Minor level: 8.60 **
Minor level: 7.03
Major level: 6.25
For the VIX to head higher, it will need two closes above 10.15.
8.98 is a minor support level. And 9.77 is 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
The S & P 500 continues to creep up to the objective.
2,476.60 is minor support. And I would expect some resistance at 2,484.40.
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
To move higher, the QQQ will need two closes above 145.31.
Support should be at 144.53. The QQQ needs to clear 144.92 to head higher. And expect resistance at 145.70.
IWM:
Major level: 146.88
Minor level: 146.09
Minor level: 144.53
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
144.53 should be minor resistance. And 142.58 should be support. And the minor 142.97 level should also offer support.
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 again under 123.83. I would expect resistance at 124.61 and 125.
123.05 is a minor support level. A break under this level the TLT should head lower.
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 closed at 119.88. The low for the day was 118.55, just 20 cents under the 118.75 support level.
120.31 should offer minor resistance and 118.75 should still be support.
I should note that the price of the metal itself barely moved yesterday, while the GLD made a big jump. In fact, gold actually closed 2.70 to the downside.
Something seems to be happening with the ETF.
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
Minor support is at 65.82. And to move higher, the XLE will need two closes above 66.41. 66.80 should 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 reversed and closed at 86.47. This becomes critical because if the FXY can close above 86.33 today, it should test 87.50 again.
86.13 is minor support. 87.11 is minor resistance.
AAPL:
Major levels for Apple are 153.13, 150, 146.88 143.75, and 140.63.
Minor support is at 152.34. 154.69 is minor resistance. A break through 154.69 and expect Apple to continue higher.
Short term momentum is shifting to the upside. The 60 minute chart just moved into an uptrend. Buying against short support should be the strategy at this point.
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.