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
ET Short March 13th - $12 call @ $0.35
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I did suggest a short term covered call on ET yesterday. The alert suggested you buy the stock and sell the $12 call that expires next Friday.
Yesterday saw the market rally strongly from the oversold condition from the past week.
Quite frankly, the drop was historic and put the market in a seriously oversold condition.
We know from how fast the bullish percent index dropped ... and it dropped to almost the 20 level in one week.
And all markets had fallen well under their lower bands on the 60 minute charts.
Even with the massive 136 point rally yesterday, the S & P 500 closed barely inside the lower band on its 60 minute chart. The lower band is 3,011.97 and the market closed at 3,090.23, or about 80 points above it.
This shows you how oversold the market had become. And it also tells us that a retest of the lower band is highly probable.
The other day, I wrote about various levels I felt the market could find support.
The one level I mentioned was the 2,925 level, which was a three level drop off the top. The market actually went to 2,855.84 or about 75 points below that level.
The other key for Friday was that the S & P managed to close at 2,954.22 or about 3 points above the minor 2,851.65 level.
But, as I said, with a move under the lower band, I do expect a retest at some point. And with the VIX breaking above its upper band on the 60 minute, a retest of its upper band would not be out of the question.
The question becomes where should the target on this rally go to?
There are a few levels to monitor.
The first is around 3,168. This price is a two-level move off the bottom and if the market has changed to a bear market, I would not expect more than a two-level move. A three-level should tell us that the bull market is still firmly intact.
Another price level is around 3,188, which is very close to the two-level move. This price level represents a 61.8% retracement of the drop. Usually, after a move like this, a bounce to the 61.8% level is where the market should go.
If these price levels are exceeded, then a move to 3,278 would not be out of the question. That price is the midband on the 60 minute chart. And after closing back inside the lower band, a move to the midband is not that uncommon.
And the resistance level from February's monthly price bar is in the 3,100 to 3,125 area.
The final area is the open gap at 3,328. A move to fill the gap would almost retrace this entire downmove. And a move greater than three levels off the bottom would tell us the momentum is still bullish.
I will reveiw these price levels on tomorrow's webinar. And if you have any charts you would like me to review as well, please email at davismdt@gmail.com and I will be happy to add them to the webinar.
So, there are a few areas of overhead resistance that we need to be aware of.
Pre open, the S & P has been trading all over the place. They were up nicely and then sold off based on more coronavirus fears.
Support from yesterday's daily price bar is in the 3,032 area. Under that price is 3,018.
Earnings are slowing this week. We hear from SPLK on Wednesday after the close.
And Thursday afternoon, we get earnings from COST.
Here are the Key Levels for the Markets:
$VIX:
Major level: 34.38
Minor level: 33.60 **
Minor level: 32.03
Major level: 31.25 <
Minor level: 30.48
Minor level: 28.91
Major level: 28.13
Minor level: 27.35
Minor level: 25.78
Major level: 25.00
Minor level: 24.22
Minor level: 22.66
Major level: 21.88
Minor level: 21.10
Minor level: 19.53
Major level: 18.75
The VIX closed at 33.42, closing 6.69 points lower on the day. The VIX got as as high 43.77 before and dropping an closing about 10 points lower.
It continues to trade above its upper band on the daily chart. The upper band is now 24.61.
The VIX managed to close inside its upper band on the 60 minute chart. That price level is 36.38.
This level should now be resistance. And a close today under 33.60 and the VIX should drop to 31.25.
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
The S & P closed at 3,090.23. The S & P closed about 10 points above the minor 3,085.95 level.
This now suggests that if the S & P closes above 3,007.85 today it should test 3,125.
The lower band should now offer support. That price level is 3,011.97.
Minor resistance is at 3,107. The S & P needs to clear this level to move higher.
QQQ:
Minor level: 219.56
Major level: 218.75 <
Minor level: 217.97
Minor level: 216.43 **
Major level: 215.65
Minor level: 214.87
Minor level: 213.30
Major level: 212.50
Minor level: 211.72
Minor level: 210.17
Major level: 209.39
Minor level: 208.61
Minor level: 207.04
Major level: 206.25
Minor level: 205.47
Minor level: 203.91
Major level: 203.13
The QQQ closed at 216.42. The QQQ managed to close within one cent of the minor 216.43 level. If the QQQ can close above 216.43 today, I would expect a test of 218.75.
215.65 should offer support, as well as 214.87.
The midband on the 60 minute chart is 224. And 215 should offer technical support,
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 151.03. If the IWM managed to close above the major 150 level.
Two closes above 151.56 and the IWM shold move up to 156.
The IWM managed to close above the lower band on the daily chart. That price level is 150 and should be support.
The 151 area is minor resistance.
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
The TLT closed at 153.94. The TLT reversed off the upper band on the daily chart. The upper band is 156.55 and yesterday's high went to 156.50, before selling off.
The upper band should be resistance.
Look for a move to 153.13. The upper band on the 60 minute chart is 156.15 and it sold off this level as well. This should be resistance.
GLD:
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
Minor level: 144.54
Major level: 143.75
The GLD closed at 149.20. The objective for the GLD should be a drop to 146.89.
The GLD is testing the midband on its 60 minute chart. That level is 148.91. A break under that level and the GLD should continue lower.
150.78 should be resistance.
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 47.10. The XLE will need two closes above 47.65 to move up to 50.
Still trading well under the lower band on the daily chart, which is 49.90. However, the XLE did manage to close above its lower band on its 60 minute chart. That price is 44.87 and should now be support.
46 should offer support. The 47.50 area could offer minor resistance.
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 298.81. Apple had a strong bounce, closing $25.45 higher.
Apple has now moved sharply above its lower band on the 60 minute chart. That price is 279 and Apple is now about $20 above it. The midband is 312, which should be the target.
The 290 area should provide short term technical support.
WATCH LIST:
Bullish Stocks: REGN, TLT, EVBG, AMN, GILD, NTRA, PDCO
Bearish Stocks: BA, ALGN, VRSN, WDAY, MMM, FDX, WIX, EEFT, TWLO, PYPL, EXPE, YUM, RCL, ZEN, CHRW, CXO, DNKN, W, PLCE