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
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 $1.06
ET Long at $11.78
Premium Collected $0.35
DBX Long at $19.70
Premium Collected $0.50
................................................................................
Friday, all short call positions expired. I will look to sell more calls this week.
Once again though, the story is that the market is crashing pre open. This is becoming a common theme.
The market gets a nice bounce and then promptly gives it all back.
Friday, the S & P expreienced a 230.31 point rally. And this was after a 89.35 point bullish gap open.
The late day rally really picked up after a speech by President Trump addressing measures to be taken help curb the spread of the coronavirus.
The bounce Friday was simply a bounce from an oversold market. Friday's close of 2,710.95 put the S & P above the lower bands on both the daily and 60 minute charts.
The lower band on the daily chart is 2,595.11 and on the 60 minute chart it is 2,582.43.
The fact that these levels were violated tells us the market should visit them again.
Pre open, the S & P is trading about 129 points lower.
This projects to an open around 2,582. This would be below the support area from Friday's daily bar, which is in the 2,600 area. Above that level is support at 2,640. With a projected open below these levels, they should be resistance.
The projected open is right at the lower band on the 60 minute chart. Watch to see if this level offers any support at all. If it can, then we should see a bounce in the market.
If it can't, the sell-off will continue. And if that is the case, watch for a test of Friday's low of 2,492.37.
The weekly price bar actually closed above the midpoint. It closed at 57% of the weekly bar.
And the range for the week was 403.73. This was three times the weekly average true range, which is 134 points.
The midpoint of the weekly bar is 2,680 and the market should open this morning about 100 points below it. This would suggest this level would be resistance on a rally.
Another significant fact about the weekly chart is that the midband is 2,512.34. And Fridays low breached the midpoint by about 32 points. The low for the week was 2,478.86. But, the S & P managed to close above the midband.
This level is still support until a daily close under it.
A close under the weekly midband would suggest that the market should move to the lower band.
That level is 1,537. And is about 1,200 points below Friday's close. A drop to the lower band on the weekly chart would mean the market drop from the top would be about 1,856 points. This would be a correction of 55%.
A bear market of this magnitude would almost mirror the sell-off to the bottom in 2009. That pullback was 57.5%.
At this point, I am not saying this will happen. I am just pointing out how the technical levels work and the price expectation from them.
One reason to believe that the markets should calm down soon is because the sentiment indicators are reading almost 0.
The bullish percent index hit a low of 1.4% on Thursday. And the percent of stocks under their 200-day moving average hit a low of 5.61% last week.
These readings are essentially equal to the readings at the major bottom back in 2009.
Can they stay at these levels for a while? Yes, I believe they could as anything is possible, but that would certainly not be the norm.
The Fed took action and lowered interest rates to zero to try and help calm the hysteria. Apparently, that is having little effect on the markets.
Pre open, retailers, airlines and restaurants are getting sold off hard. As you can imagine, any industry that relies on foot traffic will be impacted.
Some retailers are closing locations in an effort to curb this virus.
Stay calm during this crisis. And as they all do, it shall pass.
COUP reports this afternoon after the close. FDX reports tomorrow after the close.
Here are the Key Levels for the Markets:
$VIX:
Major level: 40.62
Minor level: 39.84 **
Minor level: 38.28
Major level: 37.50
Minor level: 36.72
Minor level: 35.16
Major level: 34.38
Minor level: 33.60
Minor level: 32.03
Major level: 31.25
Minor level: 30.48
Minor level: 28.91
The VIX closed at 57.83, closing 17.64 points lower on the day. This was a drop of 23.37%.
The VIX is still above the upper band on the daily chart. That level is 35.97.
The upper band on the 60 minute chart is 66.67. Look for a test of that level today.
The VIX should no doubt open higher. Watch the upper band on the 60 minute for resistance. If it takes it out, the VIX should continue higher.
S & P 500:
Major level: 3,427.40
Minor level: 3,398.35
Minor level: 3,320.25
Major level: 3,281.20
Minor level: 3,242.15
Minor level: 3,164.08
Major level: 3,125.00
Minor level: 3,085.95
Minor level: 3,007.85
Major level: 2,968.80
Minor level: 2,929.75
Minor level: 2,851.65
Major level: 2,812.50
Minor level: 2,773.45
Minor level: 2,695.35 **
Major level: 2,656.30 <
Minor level: 2,617.25
Minor level: 2,539.06
Major level: 2,500.00
The S & P closed at 2,710.95. At this point, watch the minor 2,656.30 level.
The market projects to open around 2,582 this morning. Watch the minor 2,539 level assuming more selling pressure.
At this point, the S & P has tested the major 2,500 level and it has held.
2,582.43.44 is the lower band on the 60 minute chart. Watch to see if the S & P can hold the lower band. If it can't, expect more selling.
The violation of the lower band tells us that selling is not over.
QQQ:
Minor level: 214.87
Minor level: 213.30
Major level: 212.50
Minor level: 211.72 **
Minor level: 210.16
Major level: 209.38 <
Minor level: 208.60
Minor level: 207.03
Major level: 206.25
Minor level: 205.47
Minor level: 203.91
Major level: 203.13
Minor level: 202.35
Minor level: 202.35
Major level: 200.00
The QQQ closed at 192.34. The QQQ broke under the midband, which is 195.58. This level should now be resistance. And Friday's high went to 194.48.
The lower band on the 60 minute us 182.81 Watch this level today.
175 is a short term technical support level.
IWM:
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
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 119.47. The IWM closed 7.50 higher for the day.
Still trading well below the lower band on the daily chart. The lower band is 134.79.
The IWM has now overextended about 15 points below the lower band.
The lower band on the 60 minute chart is 117.72. Watch to see if the IWM can hold this level.
TLT:
Major level: 159.38
Minor level: 158.60
Minor level: 157.03 **
Major level: 156.25 <
Minor level: 155.48
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
Minor level: 150.78
Major level: 150.00
Minor level: 149.22
Minor level: 147.66
Major level: 146.88
The TLT closed at 153.94. The TLT closed under the upper band on the daily chart, which is 159.96. This level should now be resistance. Watch the minor 153.91 level today.
Watch the upper band today. The TLT should open higher, so watch if it can clear this level.
171.68 is the upper band on the 60 minute chart and should be resistance.
150 should offer support.
GLD:
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
Minor level: 152.35
Minor level: 150.78
Major level: 150.00
Minor level: 149.22
Minor level: 147.67
Major level: 146.89
Minor level: 146.11
The GLD closed at 143.28. Watch the minor 146.1 level. If the GLD can clear this level, it should move higher. If not, it should head lower.
150 should now be technical resistance. The lower band on the 60 minute chart is 141.20. Watch the lower band today.
XLE:
Major level: 56.25
Minor level: 55.47
Minor level: 53.90
Major level: 53.12
Minor level: 52.34
Minor level: 50.78
Major level: 50.00
Minor level: 49.22
Minor level: 47.65
Major level: 46.88
Minor level: 46.09 **
Minor level: 44.53
Major level: 43.75 <
The XLE closed at 32.19. This market is still in free fall. The XLE is still well below the lower band on the daily chart. The lower band is 44.55 and the XLE is about 12 points under it.
29.62 is the lower band on the 60 minute chart. The XLE needs to clear 29.62 to see a move higher.
AAPL:
Major level: 325.00
Minor level: 321.88
Minor level: 315.63
Major level: 312.50
Minor level: 309.38
Minor level: 303.13
Major level: 300.00
Minor level: 296.88 **
Minor level: 290.63
Major level: 287.50 <
Minor level: 284.38
Minor level: 278.13
Major level: 275.00
Minor level: 271.88
Apple closed at 277.97. Apple closed $29.74 higher on Friday.
Apple is still trading above the midband on its daily chart. That level is 234.59 and Apple is still trading above it. This should be support, unless it is violated.
Apple is trading just above the lower band on its 60 minute chart. That level is 251. Watch this level today for possible support, assuming a move above it.
WATCH LIST:
Bullish Stocks: REGN, DXCM, CME, CLX, GLD, TLT, LSI, TREX
Bearish Stocks: BA, PANW, WEX, WDAY, CBRL, FDX, IT, VMW, MLNX, TWLO, CHKP, GWPH, ALXN, DLTR, WING, DIN, ATHM, ZEN, BLUE