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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The short $16 call on AMC expires after the close today. AMC sold off a bit and closed just under $15, or about $1.25 under the strike price. Based on this, the calls should expire this afternoon. However, if an adjustment should be made, you will receive a separate email today. I brought up the subject of the violation of the high or low of a price bar yesterday. And how I estimate the percent of the violation based on the close percentage of the price bar. In other words, if a price bar closes at 20% of the range of the price bar, there is an inverse relationship as to the percentage that the low of the bar will be violated before the high. In this example, there would be an 80% chance that the low will be violated before the high. If a price bar closes at 70% of the range, then there is a 30% chance that the high will be violated before the low. And usually, I look for the midoint of the price bar to act as support or resistance. Based on this simple analyis, and knowing this information, you could have entered short on Wednesday at virtually the high for the day and rode it down until it took out Tuesday's low. It happened that the low for the day on Wednesday was right around a minor support level you also knew in advance. And yesterday, I mentioned that becuase Wednesday closed at 16% of the range for the daily price bar, there was an 84% chance that the low would be violated before the high. As it turned out, the high for yesterday came it at 2,763.03, 2.28 points above the midpoint. The midpoint was 2,760.76. So, for the second consecutive day, this analysis had you looking to short around the high of the day. And once the market started to turn down, it did take out the low of Wednesday. the low for the day was 2,741.47 or about 3 points lower than the prior day day. Yesterday, the daily price bar closed at 27% of the range. Having said that, the range for the day contracted. The range was only 21.56 points as compared to the average true range of 38.43. The contraction makes me think that a bounce could be expected. And pre open, the S & P 500 is trading with a bullish bias. If the market opens above yesterday's close, watch to see if he close holds as support. The close was 2,747.33. The other key for today will be to see if the VIX fails at 17.19 and begins to head lower. 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 16.55. The VIX failed to close for two days above 17.19, which means that I would continue to expect resistance at 17.19. 18.75 should offer resistance. Minor resistance is at 17.97. $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 Minor support is at 2,739.30. Two closes under 2,739.30 and the S & P 500 could drop to 2,702. If the S & P 500 can reclaim 2,749, it should head higher. 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 171.53. Minor support is right at 171.09. If this level is violated, a drop to 168.75 could happen. 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 156.92. The IWM is within 17 cents on the major 156.25 level. And I don't see the IWM breaking under 156.25, but if it does, it should head lower. Short term charts are bullish. I expect a bounce. 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 again. If the TLT drops, it should find support at 19.53. If it can clear 120.31, it should head higher. Short term charts are bullish, so I do expect further movement to the upside. 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 124.90. The GLD had its first close under 125. It would need two closes under 124.22 to move lower. 123.44 is a support level. If the GLD does close under this level for two days, it could drop to 119. 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 67.19. 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. I do expect support at 65.63. 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 90.24. It is retesting the upper band on the daily chart. That price level is 90.58. The high for the day was 90.56, within 8 cents of the 90.63 level. We expected a retest of 90.63. Short could be setting up. 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 178.65. A test of 175 is possible. And I would expect strong support at 175. 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.
