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
Total Premium Collected $1.95
ASNA Long at $14.20
Total Premium Collected $0.75
DUST Long $4.50
Total Premium Collected $0.70
AMC Long at $15.27
Premium Collected - $2.80
Short March $16 call @ $0.55
UNIT Long at $17.00
Premium Collected - $0.35
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Now that you closed out the short VIPS call position that expired tomorrow, it leaves you with only one open position that expires tomorrow.
That is the short $16 call on AMC. AMC closed just over $15 yesterday, or about $1 out of the money. Look for an email if I suggest an adjustment to this position. They have added weekly options to AMC, so I find the stock a bit more attractive.
Daily price bars give us certain price expectations based on whether they have expanded and where they close at the range of the day.
Yesterday, I mentioned this ... "The question for today is what can we expect?
First off, with the close yesterday at the low end of the daily price bar, I would expect the low to be violated before the high."
Today I would like to explain why I made this determination.
I had mentioned that on Tuesday, the range for the day had expanded. And it expanded in a bearish direction. We know this because the close for the day was at the low end of the daily price bar.
Actually, when you measure where the close was on Tuesday, compared to the daily range, it comes out to 15%. This is simple math.
I use that percentage in an inverse manner. With a close percentage at 15% of the range, there is an 85% chance that the low for the day is violated before the high.
Again, simple math ... 100% -15% = 85%.
The simple expectation is that there is an 85% chance that the low for Tuesday would be violated before the high. It does not mean that price could reverse after taking out the low, it simply means I expect the low to be violated before the high.
The question then becomes where should resistance come in?
Yesterday, I mentioned this ... "Resistance from yesterday's daily price bar is in the 2,778 to 2,780 area. So if the market rallies off the open and tests that area, watch to see if it falters there."
The resistance levels are based on the midpoint of Tuesday's price bar and the balance point. The balance point is simply the average of the open and close. Again, simple math.
Yesterday, the market gapped up and opened almost 9 points higher.
From there, it hit the high for the day, which was 2,777.11 and proceeded to sell off the entire day, taking out the low from Tuesday, until it hit the low for the day, which was 2,744.38.
The low end of the resistance area was 2,778, which was about a point above the high for the day.
So, by using simple math, you could have entered at the high.
And to consider closing closing puts at the low for the day, you have to watch what I wrote at the end of the yesterday's update ...
"On the downside, 2,744 area should offer support. Or at least I would expect support to enter around that level. Watch the VIX for a reversal to the downside for long entries."
So, basically in yesterday's update, you had a road map for trading for the day.
To close out this discussion, I want to mention the affect of yesterday's price move on the SPY $278 put that expires this Friday. That option had a low for the day of $2.06 and a high of $4.44.
Pre open, the market is flat. And with a close percentage yesterday of 16%, I expect a violation of the low before the high once again.
I hope this has been helpful.
Here are the Key Levels for the Markets:
$VIX:
Major level: 31.25
Minor level: 29.69
Minor level: 26.56
Major level: 25.00
Minor level: 23.44
Minor level: 20.31
Major level: 18.75 <
Minor level: 17.19 **
Minor level: 14.06
Major level: 12.50
Minor level: 10.94
The VIX ended up closing at 17.24. It managed to close 5 cents above the minor 17.19 resistance level.
Watch the 17.19 level today. If the VIX can close above it today, I would expect the VIX to continue higher and this pullback to extend further.
18.75 should offer resistance.
Short term charts remain bearish, so I do expect resistance at higher levels.
$SPX:
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
I don's see the S & P 500 falling under 2,695. Watch to see if this level holds as support.
Also, minor support is at 2,744.10. Close to crossing into an uptrend on the 60 minute chart.
QQQ:
Major level: 175.00
Minor level: 173.44
Minor level: 170.31 **
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
The QQQ closed at 171.68. Minor support is right at 171.88. Watch to see if the QQQ can regain this today.
If it can't, I would expect 170.31 to hold.
Also, both short term 30 & 60 minute charts are in uptrends. So, the QQQ should find support after this pullback.
IWM:
Major level: 162.50
Minor level: 161.72
Minor level: 160.16
Major level: 159.38 <
Minor level: 158.60
Minor level: 157.03
Major level: 156.25
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
The IWM closed at 157.71. At this point, I would expect support 157.81.
And I don't see the IWM breaking under 156.25, but if it does, it should head lower.
Short term charts are bullish.
TLT:
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
Minor level: 119.14 **
Major level: 118.75 <
Minor level: 118.36 **
Minor level: 117.58
Major level: 117.19
Minor level: 116.80
Minor level: 116.02
Major level: 115.63
The TLT closed at 120.24. The TLT should did hit the 120.31 level.
121.09 is short term resistance. If the TLT can clear this level, it should ehad higher. Bouncing off its oversold condition, as expected.
GLD:
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
The GLD closed at 125.70. The GLD would still need two closes above 125.78 to test 128.13.
The next level on the downside after 125, is 124.22. A break under 124.22 and the GLD should drop to 121.88.
Short term charts remain bearish, so I am biased to the downside.
XLE:
Minor level: 76.95
Major level: 76.56
Minor level: 76.17
Minor level: 75.39
Major level: 75.00
Minor level: 74.22
Minor level: 72.66
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
The XLE closed at 67.54. The XLE continues to trade around the midband on the daily chart. The midband is now 67.17. It should offer support. The XLE continues to trade between the 200 ema and the midband.
This is also between the major 65.63 and 68.75 levels. Sooner or later, the XLE will break out or break down.
Wait for the break.
FXY:
Major level: 91.41
Minor level: 91.22
Minor level: 90.83 **
Major level: 89.06 <
Minor level: 88.87
Minor level: 88.48
Major level: 88.28
Minor level: 88.09
Minor level: 87.70
Major level: 87.50
Minor level: 87.31
Minor level: 86.92
The FXY closed at 90.25. It is retesting the upper band on the daily chart. That price level is 90.48.
I am still biased for a retest of the 90.63 level, but if the FXY cannot clear 90.23, it may break further.
AAPL:
Major level: 187.50
Minor level: 185.94
Minor level: 182.81
Major level: 181.25
Minor level: 180.47
Minor level: 178.91 <
Major level: 178.13
Minor level: 177.35
Minor level: 175.78
Major level: 175.00
Apple closed at 178.44. At this point, 175 should continue to be strong support on a pullback. And minor support is at 176.56.
Continue to buy against support.
WATCH LIST:
Bullish Stocks: AMZN, NFLX, GWW, GS, BIDU, AVGO, BLUE, STZ, DPZ, GD, LRCX, ADBE, PANW, AAPL, VRTX, CME, WEX, RHT, ADSK, CRM, SINA, KLAC, GRUB, VRSK, HLF
Bearish Stocks: DTE, BG, CNI, OMC, AIG, NWE, SIG, HOG, SLCA, NS
Be sure to check earnings release dates.
