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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FEYE Long at $17.18
FEYE Short March 8th - $17.50 Call @ $0.30
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Yesterday, I brought up the idea that what conditions should we be looking for to suggest that this bull run has ended.
In fact, I wrote this ... "But, I did just mention this last Friday ... "And at this point, I don't see conditions in place for a pullback to happen ... just yet."
As it turned out, the S & P 500 gapped up 10.68 points at the open and ran to a high of 2,816.88, only to drop almost 50 points, to a low of 2,767.66.
Once it bottomed out, the S & P 500 managed to rally back almost one half the selloff, to close at 2,792.81.
In fact, as it turned out, the move back to the close was 25.15 points or almost exactly one half the selloff. This means that the daily bar managed to close at 51% of the daily range.
There are a few things I want to point out from yesterday.
The first is that the S & P 500 did manage to take out the major 2,812.50 level. And I said that if the market can manage to do that, it should make another run at that level before any major pullback should happen.
Granted the market only took it out by about 4 points, but it did manage to get above it.
The question now is will the market manage to clear this level and close above it?
The one thing we do know is that this is a significant price level and how the market reacts now should tell us a lot about what the next minor move will be.
The second comment about yesterday is this.
I have been saying that both the 30 and 60 minute charts for the S & P 500 and most of the major indexes are bullish.
With the short term charts bullish, you still want to buy against support.
And yesterday's bottom was on the 200 ema on the 30 minute chart. It also happened to stop on the lower extreme bollinger band on the 10 minute chart.
You also recognize that when price is at the lower band on the lower timeframe and the higher timeframe is in an uptrend, it is usually a buy.
The 50 point sell off was still a countertrend trade.
Granted, the market looked rather ugly after that drop. And it does take some strong will to buy after that drop. But, if you did, you could have captured about one half the sell off.
The question for us today is, do we recover?
The resistance level from yesterday was in the 2,792 to 2,803 area. This is fairly wide due to the long-range candle from yesterday.
And yesterday's close was right around the lower end of the resistance level. So, you do want to see market hold at the 2,792 level and begin to move up.
The other nuisance from yesterday is that after the rally back, the S & P 500 stopped right at the midband on its 10-minute chart. That price level is 2,794.15. For the market to move higher, it will have to take out this price level.
If it can't, a retest of the lower band at 2,771.55 is possible.
The support area from last week's price bar is in the 2,794 to 2,804 area, which is right around yesterday's daily levels.
Pre open, the S & P 500 is trading about 1 point higher.
Earnings do continue this week.
CRM reported last night and is off about $2.50.
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 14.63 yesterday. The VIX jumped $1 or 7.37%.
The VIX got as high as 16.98 before dropping to close under 14.85.
14.85 should be resistance today. And a close under this level would put the VIX back on track to test 12.50.
Ad 15.63 should be resistance. Minor support is at 13.28.
SPX:
Major level: 2,890.60
Minor level: 2,871.08
Minor level: 2,832.03
Major level: 2,812.50 < Target Hit!
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 hit our price objective before pulling back 50 points.
What is interesting is that for the market to drop, it will need two closes under 2,792.98. As it turned out, the S & P 500 managed to rally back to close at 2,792.81 or 17 cents under the downside level.
Still, it was a close under 2,792.98.
This does imply that for the market to remain bullish, it will have to recoup the 2,792.98 level today.
I favor a close today above that level. But, how the market closes today should tell us the next minor move.
Both the 30 minute and 60 minute charts remain in uptrends which does suggest that buying against support is still the viable strategy
QQQ:
Major level: 175.00 < Hit!!!
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
The QQQ closed at 174.42 yesterday. The high was 175.79, which was 79 cents above our 175 objective which of course was hit.
With a bullish close, the QQQ diverged from the S & P 500.
Like the S & P 500, both the 30 & 60 minute charts remain firmly bullish.
173.44 should be a minor support level. And 174.22 should be as well.
At this point, you want to see if the QQQ can close above 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 156.81. The objective should be up to 162.50.
It still managed to stay above the midband which is now 156.35.
It was also just above the major 156.25 level.
Both the 30 and 60 minute charts remain strongly bullish.
TLT:
Major level: 121.88
Minor level: 121.49
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
Minor level: 118.14
Major level: 118.75 <
Minor level: 118.36 **
Minor level: 117.58
Major level: 117.19
Minor level: 116.80
Minor level: 116.02
Major level: 115.63
The TLT closed at 119.59. The next level to watch is 117.58. Two closes under 117.58 and the TLT should drop to 117.19.
And a close above 118.14 would indicate a bounce to 120.31.
120.31 should be resistance.
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 121.56. It closed just under the major 121.88 level. It will have to recoup this level to move higher.
And a close under 121.10 and the GLD should drop to 120.31.
But, short term, the GLD is oversold.
If the GLD does continue to drop, I would expect strong support at 120.31.
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 66.57. The objective should be up to 68.75.
65.63 should now be a strong support level. And 66.02 is short term support. Both the 30 & 60 minute charts remain bullish.
And technical support is around 65.
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 85.37. We did indentify yesterday that short term the FXY is oversold.
So, a close today above 85.36 and the FXY should test 85.94.
But it is oversold short term, so a bounce would be unusual.
85.16 is a minor support level and a bounce could happen.
Short term charts remain bearish. And the daily chart is also bearish. This would suggest strong technical resistance at the 86.30 level.
AAPL:
Major level: 187.50
Minor level: 184.38
Minor level: 178.13
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: 159.38
Minor level: 153.13
Major level: 150.00
Predicted High: 177.84
Predicted Low: 173.86
Apple closed at 175.85 yesterday. 175 should be support. And with two closes above 178.13, Apple should move up to 187.50.
The 60 minute chart remains bullish.
176.56 should offer some resistance.
172.66 should offer strong technical support.
WATCH LIST:
Bullish Stocks: CMG, BA, ULTA, MA, COST, SHOP, CRM, OLED, HON, UHS, ALXN, DG, MSFT, DG, AXP, PYPL, NKE
Bearish Stocks: NTES, STMP, WLK, GDOT, AN, MD, TWTR, LOGM, EZA
Be sure to check earnings release dates.