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.
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Yesterday you should have closed out the NVDA debit spread. Profit of 55% should have been booked. I would prefer to take a 50% plus profit as opposed to running the risk of the position moving against us. Especially when trading short-dated options.
It appeared that the markets would have a bearish long-range day yesterday, but the S & P 500 did manage to rally back from the low. It still ended up closing lower on the day.
The market essentially opened flat on the day and proceeded to drop to a low 2,787.72. After bottoming, the market rallied back to close at 2,805.37.
So, from high to low, the move was 37.84 points. And the rally back to the close was almost 18 points and about half the drop.
I bring this up for a few reasons. The first is that I mentioned yesterday that the midband on the 10 minute chart was around the 2,824 area. And that the S & P 500 would have to clear this level to head higher.
As it turned out, the market stopped right at the midband and turned down. The high for the day was 2,825.56 or right around the midband on the 10 minute chart.
The other reason I bring this up is that I continue to say that both the 30 and 60 minute charts are bullish, so you still want to buy on a pullback. In fact, I said this in yesterday's webinar as the market was dropping.
So, for today, the key again will be to see if the S & P 500 can clear the midband on the short term 10 minute chart which is now 2,819.
Just a few other comments about yesterday's price action.
The market came back to close at almost 50% of the daily price bar. Therefore, there is no bias as to the violation of the high or low. And yesterday's range was 130% of the daily average true range.
With an expansion yesterday, it is possible today could be a contraction.
A final point for today is this. The midpoint of last week's weekly bar is 2,830.89 and yesterday's close was 2,805.37, or about 25 points below it.
For a bullish weekly bar to form, I would expect a close above 2,830 by tomorrow.
The support area from yesterday's daily bar is in the 2,807 to 2,812 area.
Pre open the S & P 500 is trading relatively flat. Watch the levels above and the resistance levels below.
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 the day at 15.15. So, the VIX managed to recoup the minor 1485 level. So, the VIX will still need two closes under 14.85 to drop to 12.50 again.
15.63 should be resistance. Watch to see how the VIX reacts at the 14.85 level. A break under it and the VIX should head 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 is trying to find some support at the major 2,812.50 level. After closing back above it, it is now under it. Watch to see how the market reacts around this level today. Support is still at the minor 2,797.90 level.
The 30 and 60 minute charts continue to be bullish. Watch to see if the S & P 500 can clear the resistance level at 2,820.
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 177.90. A drop to test 175 is possible. 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 176 and the QQQ held support there yesterday.
Technical resistance is at 179.30. The QQQ will need to clear this level to head higher. 176.56 should offer some support.
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 151.27. The IWM did manage to drop under the 150 level, but mananaged to close above it.
Technical resistance is at 152.50. It will need to clear this level to move higher.
The IWM is oversold. A buy against 150 would be prudent.
TLT:
Major level: 126.56
Minor level: 126.17
Minor level: 125.39 **
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
The TLT closed at 126.12. The TLT actually closed above the upper band on the daily chart. The upper band is 125.38. Looking like a break out buy here with a stop just under the upper band.
If the TLT takes out 125.56, I would expect it to head higher.
Definitely overbought, the question is will the move continue.
124 should be 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 123.65. If the GLD closed today under 124.22, it should drop to 121.88.
122.66 is a support level. And support should be at 121.88.
The 60 minute chart is still in a downtrend. So, weakness could come in the short term.
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 65.97. At this point, I would expect a move up to 68.75.
But, the XLE is still trading just under the midband on its daily chart. That price level is 68.78. The XLE will have to, of course, clear this level.
Minor technical resistance is at 66. If the XLE can clear this level, look for a move higher.
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 86.34. Back to the midband, which is now 86.30. Watch to see if the FXY can hold the midband.
At this point, if the FXY cannot clear the midband, I would expect it to head lower.
The 86 area should offer 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: 191.13
Predicted Low: 185.81
Apple closed at 188.47. Watch to see if the midband holds as support. The midband is 186.66 and Apple is sitting right on it.
And both short term charts remain bullish, so wait for an entry to go long.
187.50 should offer support.
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.