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
SNAP Long at $14.54
Total Premium Collected - $1.65
RRC Long at $11.85
Total Premium Collected $0.70
RIG Long at $8.81
Premium Collected - $0.81
RIG Short March 29th - $10.50 Call @ $0.35
FEYE Long at $17.18
Total Premium Collected $0.55
FEYE Short March 29th - $17.50 Call @ $0.25
FCX Long at $12.74
Total Premium Collected $0.48
FCX Short March 29th - $13 Call @ $0.24
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AMC settled at $15.06 on Friday, or 56 cents above the $14.50 strike. So, you should have been assigned on the calls. The profit on the position has been booked.
The return ended up being 3.4%, but it was only for a 10-day holding period.
For this Friday, you should have three short call positions that expire. I will send separate emails if I suggest an adjustment.
Friday, the S & P 500 had a massive 54.17 point drop. It closed at 2,800.71.
And the range for the day was 45.69 points. With an average daily true range of 28.54, the daily range was 160% of the average.
And with a close at 1%, this was certainly a very bearish day. So, the odds are almost 100% that Friday's low will be violated before the high.
I bring up the 160% range extension because on Thursday, the S & P 500 had a 161% range extension in the opposite direction.
But, the intra day range for Friday does not include the bearish gap, so if you factor the 10.36 point gap, the range came to almost 200% of the average.
Certainly very bearish price action.
But, the major question at the moment is this the start of a larger pullback?
Before I address that question, let's review the weekly price bar.
For the week, the S & P 500 closed to the downside 21.77 points. The weekly range was only 60.84 points. So, there was actually a contraction when you compare it to the weekly average true range of 84.17 points.
The weekly price bar actually made a higher high and a higher low, but it did close at the low end of the bar. The close percentage was only 1%, so we should see weakness early in the week.
As to whether this is the start of a larger pullback, there are a few facts I need to mention. The first which, of course, is that the VIX was down to historic lows, which I have mentioned on a few occasions. I have said that a bounce would not be unexpected because of how low the VIX dropped and this would result in a pullback in the market.
The second fact is that the S & P 500 broke through the major 2,812.50 level. A pullback after taking out this level would not be unusual.
And we know that the next level to the downside is 2,792.98. Two closes under this level and the S & P 500 should drop to 2,734.40. And Friday's close did manage to close above it.
This level should act as support until it is violated.
As for the VIX, I would expect resistance at 18.75. But, if the VIX does manage to run up to 21.88 on this drive, it could indicate that this pullback may be longer than a short term correction.
The final comment I have is this. The S & P 500 is trading above its midband on the daily chart after breaking through it.
The midband is 2,738.84 which is just above the minor support level of 2,734.40.
If the market is to have a deep pullback, it will no doubt break under the midband. But until that happens, it should still be support.
Earnings do continue this week but are relatively slow as we wind down this quarter.
Pre-open, the S & P 500 is trading about 6 points lower.
Here are the Key Levels for the Markets:
$VIX:
Minor level: 22.66
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
The VIX closed out at 16.48 on Friday. As I said above, I would still expect resistance at 18.75. And if the VIX closes above 16.41 today, it should test that level.
14.84 should now be support and 15.63 as well.
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 level: 2,636.75
Minor level: 2,597.65
At this point, the minor 2,792.98 level should offer support. 2,797.90 is also a minor support level.
The 60 minute chart is still bullish and technical support from that chart is around 2,772.
The 30 minute chart is still in an uptrend. This also implies that the market should head higher. And technical support should be around 2,800.
With the short term charts bullish, I think this selloff will be an opportunity.
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 closed at 178.56. After taking out the major 181.25 level, the QQQ has now had one close under the minor 179.69 level.
A close today under 179.69 and the QQQ should test 175.
Like the S & P 500, both short term charts are bullish. Technical support is at 175.
IWM:
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
The IWM closed at 149.62 selling off from the midband which is now 155.91.
It is definitely the weakest of the markets. But short term, it is oversold and a bounce should happen.
If the IWM cannot hold the 150 level, the pullback could be deep.
TLT:
Major level: 125.00
Minor level: 124.61
Minor level: 123.83
Major level: 123.44
Minor level: 123.05
Minor level: 122.27
Major level: 121.88
Minor level: 121.49
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
Minor level: 118.14
The TLT closed at 124.86. The TLT was up 1.55% for the day and hit the 125 level.
It is now at the upper band on the daily chart which is 124.97.
123.44 should be support. Short term charts are bullish, so a pullback would be an opportunity to go long.
GLD:
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00 <
Minor level: 124.22
Minor level: 122.66 **
Major level: 121.88
Minor level: 121.10
Minor level: 119.53
Major level: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75
The GLD closed at 123.97. 125 is still the objective for the GLD. But, the GLD is struggling to clear 124.22.
The 30 minute chart just crossed into an uptrend. The midband on the 30 minute chart is 123 and should now offer support.
And 122.66 should still be minor support.
XLE:
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 <
Minor level: 64.85
Minor level: 63.28
Major level: 62.50
Minor level: 61.72
Minor level: 60.16
Major level: 59.38
The XLE closed at 65.47. The XLE is now back under the 65.63 level. 62.50 should be support at this time.
Short term charts remain bullish. Buy against support.
FXY:
Major level: 89.84
Minor level: 89.65
Minor level: 89.26
Major level: 89.06
Minor level: 88.87
Minor level: 88.48
Major level: 88.28
Major level: 87.50
Major level: 86.72 <
Major level: 85.94
Minor level: 85.75
Minor level: 85.36
Major level: 85.16
Minor level: 84.97
The FXY closed at 86.79. On its way to 87.50. The FXY did clear the midband which is 86.35. This level should now be support.
This is where it is prudent to see if a market can clear or fail at the midband. Just wait to see what it does.
If the FXY can hit 87.50 on this drive, it could indicate that this downtrend is over.
AAPL:
Major level: 200.00
Minor level: 198.44
Minor level: 195.31
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
Predicted High: 193.90
Predicted Low: 188.30
Apple closed at 191.05. Watch to see if the midband holds as support. The midband is 186.40.
A close today under 192.19 and Apple should drop to 187.50.
Friday I said: "Apple is an overbought short term. Wait for the pullback to enter."
And both short term charts remain bullish, so wait for an entry to go long.
WATCH LIST:
Bullish Stocks: CMG, MELI, ORLY, AVGO, WAT NOW, MA, MCD, VRSN, EW, CRM, WBC, CB, HON, XLNX, ZBH, KMB, DRI, MSFT, WP, PYPL, ZEN
Bearish Stocks: LMT, HUM, NOC, LLL, GS, FFIV, CAT, WHR, URI, CTS, JPM
Be sure to check earnings release dates.