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
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DUST Long $4.50
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RRC Long at $11.85
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RRC Long at $9.20
RIG Long at $8.81
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FEYE Long at $17.18
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ET Long at $11.78
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DBX Long at $19.70
Premium Collected $0.50
AGNC Long at $13.19
AGNC Short March 13th - $13.50 Call @ $0.40
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The total shutdown of the United States economy continues. I am beginning to feel that writing this every morning is becoming more an update on the closing of America, as opposed to how to navigate the markets.
Navigating the markets is easy ... stay out. And if we get a bounce, let's add put protection.
If you continue to trade, trade very small size.
Volatility has exploded option pricing and it makes even day trading more expensive. And with more costs come more risk.
But, the question for you and me is how far can these markets drop?
Theoretically, they can go to zero.
Do I think that will happen? No. But, they can drop a lot further from where we are now.
In fact, in yesterday's webinar, I reviewed all our markets starting with the monthly chart, all the way down to the 60 minute charts.
The level that keeps coming back to me as the ultimate objective for the S & P is around 1,500.
A drop to this level would be a drop of about 56% or roughly equal to the drop into the March 2009 bottom.
But, back in 2008, we only had one industry in total disarray.
Now, there are multiple industries almost at a standstill.
This includes airlines, cruise lines, hotels and restaurants.
In fact, I just listened to an interview with a gentleman who has a chain of about 140 restaurants across the county. He has effectively closed his entire country.
Then there is the interview I listened to with Hotel experts discussing how their occupancy rates are at their lowest levels ever.
Drive by a nearby hotel and you will see how their parking lots are ghost towns.
Every day the stories get worse.
On the bright side, I saw a small company whose stock exploded. Their symbol is BMRA.
Two days ago, BMRA closed at 2.37. Yesterday, it closed at 10.30.
When I looked into this company, the story is that they have developed a test for COVID-19 that provides the results in 10 minutes.
This would be a huge advantage to help flatten the curve.
I know this because a friend of mine had his son tested for the virus and he said it takes 4 days to get the results back.
Shortening this to 10 minutes would be a huge help.
The other company that has exploded from this pandemic is APRN. The is Blue Apron Holdings and they deliver meals to your home.
The stock has risen from a low of 2.01 to 16.25 in about 2 weeks.
Please feel free to email me with stories you have about how the virus is affecting you or people you know.
For the short term, here is what I am looking at.
The price action yesterday was actually relatively bullish considering how it has been trading.
Here is why I say that.
The S & P opened with another bearish gap. The gap was 92.69 points. And it opened at 2,436.50 and dropped to a low of 2,280.52.
From there, it rallied back to close at 2,398.10 or 117 points off the low.
The day ended up closing at 68% of the range of the daily bar.
This was the second day when the S & P closed above 50% of the daily bar. And once again, the market had a selling climax.
The down to up volume was 16.86. This now brings the number of selling climaxes in this sell off to 9.
The market should turn when the selling ends.
For today, the key intraday support level is around 2,340. Pre open, the S & P is trading about 66 points lower. This projects to an open just under the 2,340 level.
Watch to see if the market had held 2,340.
Another thing I want to point out is that today is the one month anniversary of the top. Markets like anniversary dates. If the S & P can form a pivot, I would expect a bounce in the market.
Forming a pivot would mean that the market does not take out yesterday's low of 2,280.52.
I am going to close out by sharing a story I read in my county. I saw an interview with the first patient who contracted coronavirus in my area.
He mentioned that he was treated with two experimental drugs and he is considerably better. He felt without these drugs, he would not be giving the interview.
A cure would certainly stem this slide.
Stay safe in these times.
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
The VIX closed at 76.45. The VIX closed 0.54 points higher on the day.
Considering the S & P closed 131 points lower, a move of 0.54 is telling. Perhaps the fear is abating.
Watch the major 75 level today.
However, it is right at the upper band on the 60 minute chart. That price level is 84.14.
If the VIX clears this level today, expect it to go higher. This level needs to hold as resistance for the market to move higher.
S & P 500:
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
Minor level: 2,460.95
Minor level: 2,382.85 **
Major level: 2,304.75
Minor level: 2,226.65
The S & P closed at 2,398.10. At this point, watch the minor 2,382.85 level.
The S &P should open below it. And it would then be resistance on a rally. And would have to reclaim this level to move higher.
The lower band on the 60 minute chart is 2,326.91. The market closed just above this level yesterday. It will have to hold the lower band to move higher.
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 176.60. The QQQ is now within 20 points of the lower band on the daily chart. That level is 156.28.
The lower band on the 60 minute is 168.50 Watch this level today.
The major 175 level should offer support. And support from the daily bar is around 173.
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 99.97. The IWM managed to close 8.4 points lower on the day.
Still trading well below the lower band on the daily chart, which is 129.69.
The lower band on the 60 minute chart is 98.192. And the IWM is just above this level. If this cannot hold, look for more selling.
TLT:
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
Minor level: 146.10
Minor level: 144.53 **
Major level: 143.75
Minor level: 142.97
Minor level: 141.41
Major level: 140.63
The TLT closed at 144.35. The TLT sold off 8.63 or 5.64%.
Watch the 140.63 level. A break under this level and the TLT should continue lower.
The midband should offer support, which is 136.
151 is the midband on the 60 minute chart and should be resistance.
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 140.70. Looking for a move to the midband on the daily chart, which is 137.
139 is the lower band on the 60 minute chart and should offer support. If the GLD manages to go down, look for resistance at 150.
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 23.98. The XLE continues to crash. It dropped 14.36% yesterday.
The XLE continues to remain oversold. The lower band on the daily chart is 41.58 and the XLE is now 42% below it.
22.46 is the lower band on the 60 minute chart. And the XLE actually closed above it. Watch to see if this level holds. You know what will happen if it can't.
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 246.67. Apple closed $6.19 lower yesterday.
Apple is still trading above the midband on its daily chart. That level is 235.35 and Apple is still trading above it. This should be support, unless it is violated.
Still one of the stronger stocks by virtue of the fact that it is above the midband.
Apple is trading just above the lower band on its 60 minute chart. That level is 234 Watch this level today for support.
WATCH LIST:
Bullish Stocks: MASI, ERY, TNK, LAKE, DHT
Bearish Stocks: AMZN, NFLX, AVGO, ULTA, ALGN, VRSN, MCD, PANW, HON, OLED, MMM, WDAY, CMI, WEX, WIX, PYPL