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.
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The market opened gapped down and found support around the 2,421.90 level before rallying back to close at 2,432.46.
The actual low for the day was 2,418.53. What is interesting about the low is that the minor support level under 2,421.90 happens to be be 2,418.00.
Pre open, the market is trading slightly to the upside, so we should see a bullish open today.
I do want to mention the FXY. Going back the 5th of June, I outlined how we were looking for the major 87.50 level to offer resistance and how youo could enter the market with a low risk entry. The next day, the FXY gapped up, thereby offering an entry slightly above 87.50.
I suggested a stop either above the midband on the daily chart, which was about 89 at the time or above the high of the daily price bar on the 5th.
As it turned out, two days ago, the FXY retested the 87.50 level hitting a high of 88.35.
The high for the day on the the was 88.08. So, you would have had to set your stop at least 27 cents above the high on the 5th.
If you did not want to use a stop above the midband, the other set up was to consider using the average true range (ATR). The ATR for the FXY is about 57 cents. So, by using a stop of around 60, your stop would not have picked off.
The FXY collapsed yesterday and closed down at 86.75. 86.72 is a support level, so if the FXY continues to break under that level you would expect further movement to the downside.
The next major level to the downside is 85.94. If the FXY closes under that level for two days, it could drop to 81 to 82 area.
This whole discussion began based on the expectation of how far a price move should go counter trend and I felt I would continue the discuss to include stop selection. I hope this has been helpful.
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 continues to trade between the 12.50 and 9.38 levels.
It closed at 10.90 yesterday, just four cents under the 10.94 level.
Minor resistance should be at 11.72 and 10.94. If the VIX opens under 10.94, I would look for resistance at that level.
$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
Watch the 2,425.80 level this morning. If the S & P opens above that level, I would expect it to offer support.
Also, 2,429.70 is a minor support level. And watch to see if the S & P 500 can clear the 2,437.50 level. It could offer resistance on a retest.
QQQ:
Major level: 146.87
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 ***
Minor level: 136.72
The QQQ dropped to a low of 137.49 yesterday, which was one cent under our support level.
Watch the minor 138.67 level today. If this level holds, I would expect the QQQ to head up. A drop under 138.67 and the QQQ could retest 137.50.
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
140.23 is a minor support level for the IWM. If this level holds, the IWM should head back up. If not, a drop to 137.50 is possible.
141.02 could be minor resistance.
TLT:
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
Minor level: 121.09
Minor level: 119.53
Major level: 118.75
Minor level: 117.96
125.78 should continue to be minor support. Yesterday's low was juts above it. On the upside, 127.34 should be resistance.
Longer term, the objective should be to 128.13.
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
118.75 should be the objective for the GLD. Minor support should be 117.19.
120.31 should be resistance.
XLE:
Major level: 71.88
Minor level: 71.10
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
The XLE closed four cents above the 65.63 level, which I mentioned yesterday should be support. If this level holds, a bounce up to the 67.50 should be the next minor move.
A break under 65.63 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
A close today under 87.11 implies a move down to 85.94. 86.33 should be minor support.
87.11 could offer minor resistance.
AAPL:
Major levels for Apple are 162.50, 156.25, 150, 143.75, and 137.50
Apple closed just above the 143.75 level.
140.63 should continue to be support and a level that should not be violated. 148.44 could offer minor resistance.
WATCH LIST:
Bullish Stocks: TSLA, NTES, MLM, MMM, FDX, CI, MPC, DAL, CHD, PENN, CONN, POT, CENX
Bearish Stocks: AZO, AAP, CASY, DLTR, EXR, LSI, SLB, JCI, SFLY
Be sure to check earnings release dates.