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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APA Long Oct $47.50 Call at $3.45
APA Short Oct $52.50 Call at $1.10
AMD Long at $12.77
AMD Short July 7th-$13 Call at $0.32
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The day after the holiday, closed session resulted in a small gain for the S & P 500. The market closed at 2,432.52, up 3.51 points for the day.
This is now the third day in a row where the range has contracted as compared to the average true range (ATR). Yesterday's range was only 12.85 as compared to a 15.85 ATR.
And yesterday was the second consecutive day where both the S & P 500 and the VIX have closed in the same direction.
Quite frankly, I cannot recall the last time this event has occurred. But, I do know that it is highly unusual and typically signals extra volatility.
I suspect today will be no different, as all markets are set to open lower this morning.
As I write this, it appears that the S & P 500 will open almost 10 points to the downside.
Based on the pre market trading, the S & P 500 should open around 2,421, which as you know is right around our downside confirming level.
This downside reaction should not be a shock due to the fact that the VIX had traded above its upper bollinger band on its 30 minute and 10 minute charts.
The upper band on the 30 minute chart for the VIX is 12.46. And for the 10 minute chart it is 13.
At this point, a retest of the these levels is the most likely scenario. You want to see these levels offer resistance and turn down, especially considering that the upper band on the 30 minute sits right at the key 12.50 resistance level.
Should the VIX break through the upper levels, it will tell us that the selling is not over.
Tomorrow we will get the release of the release of the Non Farm Payroll at 8:30 EST.
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
The VIX never broke under the 10.94 level, closing at 11.07. At this point, support should be at 10.94, with a move of 12.50 likely.
I still expect 12.50 to act as resistance.
Watch for the retest of the upper band on the 30 minute chart. As I mentioned before, that level is 12.46.
$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
With an anticipated open around the 2,421 level, I would expect 2,429.70 to offer resistance.
Two closes under 2,421.88 and the objective should be 2,375. 2,429.70 is a minor level to watch. Two closes under that level and the objective is down to 2,406.
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 at 137.53, just three cents above the 137.50 level. 135.94 is the next minor level. Two closes under that and the QQQ should drop to 131.
134.38 could offer some minor 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 did close above 141.41 for the second day. This now implies a move up to 143.75.
141.02 should offer minor support. 142.97 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
The TLT will need two closes under 124.22 to move to 121.88. 125.18 should now be resistance.
123.44 should be minor support. 125 should now be 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
Minor level: 116.41
Major level: 115.63 <<
115.63 should be support and the GLD is sitting right there. If the GLD holds and consolidates, it should tell us that the GLD will make another run. A break under 115.63 and I expect further movement to the downside.
The GLD has essentially traded between 121.88 and 115.63 for the last year.
114.06 is minor support.
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 sold off and closed at 64.83. A close today under 64.85 and the XLE should retest 62.50.
65.23 is a minor level to watch, along with 64.85. A close under 65.23 and the XLE should drop to 64.
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 hit a low of 84.69, within 31 cents of the 84.38 objective.
The FXY did close above 84.77. A close today above that level and a bounce up to 85.94 could happen. Watch this level today.
Minor resistance is 85.16. 84.57 could be minor support.
Continue to trail a stop if you followed the short strategy.
AAPL:
Major levels for Apple are 162.50, 156.25, 150, 143.75, and 137.50
Apple continues to trades around the 143.75 level. 142.97 is the minor level to watch. Two closes under 142.97 and Apple should drop to 141.
Short term momentum remains bearish.
WATCH LIST:
Bullish Stocks: HUM, GS, FDX, CMI, WBC, CME, MCO, DGX, TSO, WAB, JPM, STT, NKE, HIG, DAL
Bearish Stocks: AZO, ORLY, JACK, GOLD, PZZA, QCOM, AMBA, SIMO, BGS, ACIA, AMC
Be sure to check earnings release dates.
