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
NVDA Long March 29th - $172.50 Call @ $4.20
NVDA Short March 29th - $177.50 Call @ $2.20
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Yesterday, I suggested a short term debit spread on NVDA. The idea on these short term spreads is that I am anticipating that the low for the week is coming early in the week. And if the stock does not move by Wednesday, the position is closed. The reason for this is because time premium on these short-dated options will start to melt away about midweek through the week.
The market tried to find its footing yesterday after the large range bearish day on Friday. For the day, the S & P 500 settled 2.35 points lower, at 2,798.36.
But, as I mentioned yesterday, a close under 2,792.98 would most likely indicate this pullback could go farther. Actually, two closes under 2,792.98 should indicate that the S & P 500 would test 2,734.40
I also said that this level should be support until there is a close under it.
As it turned out yesterday, the market dropped to a low of 2,785.02, or about 8 points under the previously identified level and managed to rally back and close above it.
But, as I said, I felt it should offer support and it did.
The question for today is do we retest it again? It is possible, but I think the bottom is in.
The close percentage on Monday was only 1% which put the odds at almost 100% that Friday's low would be violated before the high.
And that was how price rotated yesterday. The market opened at 2,796.01 which actually satisfied that requirement right at the open.
From there, it dropped to a low of 2,785.02 before rallying back to close at 2,798.36.
The point here is that reading the close percentage can help you to determine how the price should move intra day.
Yesterday's close percentage came to 54%. And it qualified as a doji bar. So, for today, you want to watch the close of 2,798.36 as support.
The other instrument to look at is the VIX. As I have been saying, the VIX would have to rally up to 21.88 for me to consider we would have a deeper pullback in the markets.
And I felt that resistance should be at the 18.75 level. So, of course, the VIX should have to take out 18.75 at a minimum for a move lower. I felt that 18.75 should offer resistance on the VIX.
As it turned out, the VIX got as high as 17.85 before moving down to close at 16.42.
If the VIX continues lower, the market should head higher.
Pre open, the S & P 500 is trading about 14 points higher. Yesterday's high of 2,809.79 could also offer support on a pullback.
Tomorrow is our webinar. If you would like me to review any charts, please email me and I will be happy to try and add them to the webinar.
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 16.42 yesterday. So, we had a divergence yesterday. Both the VIX and the S & P 500 closed lower. The last time this happened was on December 28th and the market rallied after this divergence.
14.84 should now be support. And 15.63 as well. If the VIX drops under 15.63, watch to see if it holds at 14.84. If it can't, it should continue lower.
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
The S & P 500 managed to close just above the minor 2,797.90 level. This level should still be support.
The 30 and 60 minute charts continue to be bullish. As I said yesterday ... "With the short term charts bullish, I think this selloff will be an opportunity."
There is some technical resistance at 2,826.
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 178.22. This was the second close under the 179.69 level, so the 181 level could offer some resistance.
But, if the QQQ does drop to 175, I would expect support there.
Like the S & P 500, both short term charts are bullish. Technical support is at 175.
178.13 is a short term support level and the QQQ managed to close just above it.
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 150.28 selling off from the midband which is now 155.90.
It's definitely the weakest of the markets. But, short term it is oversold and a bounce should happen. We should see a bounce today.
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 126.06. The TLT inched up slightly and is now right at the upper band on the daily chart. The upper band is 125.10.
As you know, this is highly indicative of an overbought condition. Enter long at your own risk.
Watch the minor 126.56 level on the upside. A failure at that level and the TLT should drop. 123.44 should offer support.
GLD:
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00 < HIT
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 124.92. The 125 objective was hit yesterday. Watch to see if the GLD clear this level. If it can, I would expect it to continue higher.
The 60 minute chart is still in a downtrend. So, weakness could come in the short term.
124.22 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 65.50. Trying to clear the 65.63 level. 62.50 should be support at this time.
65.23 is a minor support level.
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 86.71. Yesterday's high came to within 60 cents of the 87.50 level. The FXY did clear the midband which is 86.34. This level should now be support.
87.11 is a minor resistance level. And 86.33 should be minor support.
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: 191.41
Predicted Low: 186.07
Apple closed at 188.74. Watch to see if the midband holds as support. The midband is 186.47.
And both short term charts remain bullish, so wait for an entry to go long. Nibbling long at the 187.50 level would be worth the risk.
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.
