While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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
SNAP Long at $14.54
Total Premium Collected - $2.10
RRC Long at $11.85
Total Premium Collected $0.70
RRC Long at $9.20
RIG Long at $8.81
Premium Collected - $1.45
FEYE Long at $17.18
Total Premium Collected $0.80
AMC Long at $16.16
Total Premium Collected $0.35
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You should have been able to recoup some of the premium on the $64.50 call on Friday. When I sent the alert, it was trading around 60 cents. It actually worked out better for you if you delayed the sale because it traded as high as $1.50.
With the profit on the short call, the loss was minimal. But, again this shows how you do not want to overtrade these short term positions. The deal was moving nicely until some news came out that drove the stock down $5.
Back to the market.
All major markets ended the week with massive moves. The S & P 500 was up 4.41%. The DOW closed to the upside 4.71%. The NASD Composite was up 3.88% while the QQQ closed up 4.08%.
The laggard was the IWM which closed to the upside only 3.43%.
This was the largest one-week gain in the S & P 500 since the 4.85% gain for the week ended November 30, 2018.
After that gain for November 30th, the market was down 4.6% the next week.
Can that happen again this time?
Yes, it is possible, but I doubt it. I say this for a few reasons.
The first was the fact the move in November was under the midband on the daily chart. At that time, the market had traded well under the midband and it was approaching the midband from below it.
This time, the price action was approaching the midband from above and it slightly breached it before staging this massive rally.
These are minor nuances I like to point out.
The close Friday reversed three prior bearish closes on the S & P 500. This is probably the strongest price reversal formation.
I call it a three bar reversal. With this type of price bar, you generally want to be a buyer if the market can pull back into the body of this price bar. And the expectation is that the high of the bar will be breached before the low.
There were quite a few stocks that closed the week with this formation including NFLX, AAPL, ZBRA, CRM, GD, DATA and VGR.
Watch these stocks for follow through this week.
Last week's weekly price also qualified as a key reversal bar. This is when the price bar makes a lower low and a higher high. And it also closed above the high of the prior weekly bar.
An opportunity would exist this week if the S & P 500 pulled back to the 2,807 to 2,812 area. I would expect support to come in at this level.
For the day, the S & P 500 closed 29.85 points higher. The support should be in the 2,863 to 2,869 area from Friday's daily bar.
Pre open, the S & P 500 is trading almost 11 points higher. If this trading were to hold up through the open, the market should open around last week's high of 2,884.97. Quite frankly, I would prefer a pullback to within the body of last week's bar because if the high is taken out this morning, it would have satisfied the requirement of the three bar reversal at the open.
Here are the Key Levels for the Markets:
$VIX:
Major level: 21.88
Minor level: 21.10
Minor level: 19.53
Major level: 18.75
Minor level: 17.97
Minor level: 16.41 **
Major level: 15.63 <
Minor level: 14.85
Minor level: 13.28
Major level: 12.50
Minor level: 11.72
The VIX closed yesterday at 16.30. To move higher, the VIX will need two closes above 16.41.
15.63 has to hold as support for the VIX to move higher.
I do need to point out that the VIX and the S & P 500 diverged on Friday. They both closed to the upside.
As you know, this often precedes a change in direction.
The key levels for the VIX are 16.41 on the upside and 14.84 on the downside.
A break above or below either one should signal the VIX will continue in that direction.
SPX:
Major level: 2,968.80
Minor level: 2,949.25
Minor level: 2,910.15
Major level: 2,890.60 < <
Minor level: 2,871.08
Minor level: 2,832.03 **
Major level: 2,812.50 <
Minor level: 2,792.98
Minor level: 2,753.93
Major level: 2,734.40 <<
Minor level: 2,714.88
Minor level: 2,675.83
Major level: 2,656.30
Since reversing off the major 2,734.40 line, the S & P 500 has run almost two levels to 2,890.60. Friday's high came to within 5 points of the 2,890.60 level.
At this point, I would expect the S & P 500 to cleat 2,890.60.
The question is will it clear 2,968.80?
This is a MAJOR level and this will be the third attempt to clear it. Clearing this level would be a major indication that the market should head higher.
A failure here and I would expect a pullback.
2,856.40 should offer minor support.
QQQ:
Major level: 193.75
Minor level: 192.19
Minor level: 189.06
Major level: 187.50
Minor level: 185.94
Minor level: 182.81
Major level: 181.25 <<
Minor level: 179.69
Minor level: 176.56
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
Major level: 168.75
Minor level: 167.19
The QQQ stopped at 181.04. The QQQ did clear the major 181.25 level.
176.56 should now be support. And 178.13 should offer strong support.
The ultimate target for the QQQ is 187.50. 179.69 is minor support and 184.38 is minor resistance.
IWM:
Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
Minor level: 154.69
Minor level: 151.56 **
Major level: 150.00 <
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
The IWM closed at 150.86. The next minor level is 151.56. Two closes above this level and it should move up to 156.
The IWM is still trading below the midband on the daily chart, which is 155.82. But with all the major markets clearing their midbands, I would expect the IWM to follow.
150 should be strong support. And a move above the minor 153.13 level I would expect the IWM to head higher.
TLT:
Major level: 134.38
Minor level: 133.60
Minor level: 132.03 **
Major level: 131.25 < HIT
Minor level: 130.47
Minor level: 128.91
Major level: 128.13 <
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
The TLT closed out at 131.74. The TLT will still need two closes under 130.47 to test 128.13.
128.13 should offer strong support.
Still above the upper band on the daily chart. That level is 130.24.
I would expect the TLT to continue to bounce until a firm close under the upper band.
Looking like this move is exhausted.
GLD:
Major level: 128.13
Minor level: 127.74
Minor level: 126.95
Major level: 126.56 << HIT
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88
Minor level: 121.49
Minor level: 120.70
Major level: 120.31
The GLD closed at 126.59, just 3 cents above the major 126.56 level.
128.13 is a key level on the upside. If the GLD takes it out, it should go higher. If it can't, expect a pullback. Like the TLT, it is looking exhausted.
Support should be at 125.
XLE:
Major level: 65.63
Minor level: 64.85
Minor level: 63.28
Major level: 62.50 <
Minor level: 61.72
Minor level: 60.16 **
Major level: 59.38
Minor level: 58.60
Minor level: 57.03
Major level: 56.25
Minor level: 55.47
Minor level: 53.91
Major level: 53.91
The XLE closed at 61.27. The XLE should test 62.50.
60.55 is minor support. Look for 60.94 to offer support as well.
The trend is still bearish, so if the XLE cannot clear 62.50, I would expect a pullback.
AAPL:
Minor level: 203.13
Major level: 200.00
Minor level: 196.88
Minor level: 190.63 **
Major level: 187.50 <
Minor level: 184.38
Minor level: 178.13 **
Major level: 175.00
Minor level: 171.88
Minor level: 165.63
Major level: 162.50
Apple closed at 190.15. Apple took out 187.50, as was expected.
The next minor level is 190.63. Two closes above this level and Apple should test 200.
187.50 should offer strong support.
Buy against support.
WATCH LIST:
Bullish Stocks: LMT, SHOP, MA, LLL, COST, MLM, APD, MCD, CME, SAGE, V, CB, WIX, HSY, RACE, DG, IR, FIS, LLY
Bearish Stocks: GOOGL, FANG, APC, COP, WUBA, DDS, XEC, KSS, WDC, SINA, CNQ
Be sure to check earnings release dates.
