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.
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GOGO Long at $19.93
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DUST Long $4.50
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AMC Long at $16.16
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GRUB Long June 7th $64.50 Call at $2.00
GRUB Short June 7th $69.50 Call at $.40
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For a bearish day, yesterday's price action seems rather orderly for a selloff.
The S & P 500 actually opened rather flat after being mostly lower pre open. After the open, the market dropped down to a low of 2,278.81 before managing to rally back to close at 2,744.45.
For the day, the S & P 500 closed 7.61 points lower. So, the market managed to rally back 15.64 points off the bottom. And it closed at 46% of the daily bar.
So, by the end of the day, the daily bar almost formed a perfect doji bar.
And a doji can often signal a reversal. And because of how oversold the market has now become, I would expect a bounce.
That and the fact that the S & P 500 moved under the major 2,734.40 level but managed to close back above it.
As I mentioned before, I feel that the 2,734.40 level is a key level and should tell us if this selloff will be deeper.
This is because the 2,734.40 level is a two-level drop off that last significant pivot high. As a refresher, that level was 2,890.60. The S & P 500 pivoted at 2,892.15 on May 16th.
From there is dropped under the major 2,812.50 level and has now hit the 2,734.40 level.
I have mentioned many times before that a two-level drop in a bull market is a normal pullback. If this move went three levels, I would expect further selling.
The question now is what will confirm that the 2,734.40 level will hold?
I would want two days that close above it.
So, yesterday would be the first. And if the S & P 500 can close above 2,734.40 today, it would suggest that this level has held.
Pre open, the S & P 500 is trading about 16 points higher.
Support from yesterday's daily bar should be in the 2,746 area.
Based on the projected open of 16 points, the market should open within 3 points of yesterday's high.
If the S & P 500 can clear yesterday's high of 2,763.07, it should then be support.
On the upside, the S & P 500 will still have to contend with the midband as resistance. That level is now 2,777. Watch to see if the market can clear this level. That would certainly be bullish. And if it can't, a move lower would be expected.
As a final comment, the S & P 500 is sitting right on the lower band on the 30 and 60 minute charts. This should be strong support.
I do want to mention that I did pick up some high yield yesterday. As I previously mentioned, I said I would share the trades I do.
I actually added two positions.
The first position was AGNC. AGNC did drop their dividend from 18 cents to month to 16 cents. Based on the 16-cent monthly dividend and yesterday's closing price, the annual return works out to 11.4%.
And the second deal I added was to get back into NRZ. NRZ pays 50 cents per quarter. Based on yesterday's close of $15.48, the annual return works out to 12.9%.
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 18.88. It did manage to close just above the 18.75 level.
I would expect resistance at 20.31. And on the downside, look for support at 17.19. A break under 17.19 would be bearish.
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 < HIT
Minor level: 2,714.88
Minor level: 2,675.83
Major level: 2,656.30
Downside target to 2,734.40 was hit. But, I am sure you expected that. Closing above it was bullish.
Also, there is a minor support level at 2,744.10, which the market also managed to close above.
The next level on the upside should be 2,753.93. Two closes above this level and the S & P 500 should test 2,812.
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 170.12. 175 is resistance now. 171.88 is a key minor level.
If the QQQ cannot close above 171.88 today, I would expect a move much lower.
The midband is 174.14. And it should now be 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 146.37. Look for a move down to 143.75.
Longer term I expect a drop to the 140 area.
But, a short term bounce could happen. The bounce could go to 150.
The lower band on the 60 minute chart is 145.17 and the IWM is sitting right on it.
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 132.44. This was the first close above 132.03. A close today above it and the TLT should test 134.38.
A complete buyer frenzy. Just waiting for the plug to get pulled.
132.82 should offer minor resistance.
GLD:
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00 < Hit
Minor level: 124.22
Minor level: 122.66
Major level: 121.88
Minor level: 121.49
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75
The GLD closed at 125.11. The GLD hit the 125 target we were looking for.
123.44 should be minor support. And 126 minor resistance.
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 59.52. The XLE is clinging to the 59.38 level. Watch to see if this level holds today.
Short term support is at 57.81. If the XLE drops under this level expect it to head lower.
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 173.30.
Still biased for a bounce at 175. If it can bounce, I would expect a move up to 187. 168.75 should offer support.
WATCH LIST:
Bullish Stocks: CME, GPN, HSY, TLT, ELS, CBOE, GWR, ICE, BAH
Bearish Stocks: AMZN, GOOGL, REGN, ALGN, HD, ASML, RTN, GD, FDX, MMM, NVDA, JAZZ, BLUE, CAT, CXO, FANG
Be sure to check earnings release dates.
