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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Friday began with a gap open below Thursday's low of 7.62 points. Based on Thursday's close percentage of 87%, the odds were almost 90% that Thursday's high would be violated before the low.
As it turned out, that was not true. With the bearish open, Thursday's low was violated right off the open.
After opening at 2,863.10, the S & P 500 managed to drop almost 40 points to a low of 2,825.39.
Once the market found support, it managed to stage a massive rally of 65.92 points to close at 2,881.40.
The S & P 500 did manage to take out Thursday's high, but only after taking out the low first.
Friday's range was the first daily range over 60 points since the 63.74 point range on January 4th.
And Friday certainly qualified as a long-range candle. The daily range was 213% of the daily average true range.
As it turned out, the close was 85% of the daily bar. So, the odds still favor violating the high before the low.
With all this bearish price action, the S & P 500 has still not managed to close for two consecutive days under the 2,871.08 level. Thursday closed just under it and Friday managed to recoup it by about 10 points.
Having said that, Friday's low did come to within 13 points of the major 2,812.50 level before rallying to close above 2,871.08.
The support level from Friday's daily bar is in the 2,858 area.
For the week, the S & P 500 closed 64.24 points to the downside. And it closed at 50% of the weekly bar.
The weekly bar had a massive 111.93 point range. This was 150% greater than the weekly average true range of 73.64 points.
The close of 2,881 is a key level. The market is projected to open about 34 points lower. So, watch the close on a rally.
Earnings continue this week. BABA reports Wednesday after the close. And BIDU reports Thursday after the close. And NVDA also reports after the close on Thursday.
Here are the Key Levels for the Markets:
$VIX:
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
Minor level: 11.72
The VIX closed at 16.06 on Friday. At this point, 18.75 should offer resistance. And 17.19 is minor resistance.
With the market trading higher before the open, the VIX should no doubt open higher this morning.
If it opens above 17.19, look for this level to be support. And 20.31 should be minor resistance.
SPX:
Major level: 2,968.80
Minor level: 2,949.25
Minor level: 2,910.15
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
The S & P 500 is projected to open around 2,847 based on the pre market trading.
Watch the minor 2,832 support level. And watch to see if Friday's low is violated.
The 2,856 area is also an area of support.
With the trade tension, I expect this increased volatility to continue, until something meaningful is resolved.
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 out Friday at 185. The QQQ did test the 181.25 level as I mentioned on Friday. The low for the day was 181.03 before rallying to close almost 4 points higher. Also, I mentioned that 181.25 should offer support and that is what happened.
At this point, a retest of 181.25 is highly probable.
Minor support is at 182.81. If this level is violated, I would expect a drop to 181.25.
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 156.62. The IWM managed to close back above the 156.25 level.
154.69 is a minor support level on the downside. Two closes under 154.69 and it should drop to 150, but 154.60 should still be minor support.
The IWM would have to reclaim 157.81 to head higher.
TLT:
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00 < HIT
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
The TLT closed out at 124.59 last week. This now suggests that if the TLT closes under 124.61 today, it should drop to 123.83.
123.83 should offer support on the first test.
The TLT would have to reclaim the 125 level to head higher.
125.78 on the upside is minor 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: 121.49
Minor level: 120.70
Major level: 120.31<
Minor level: 119.92
Minor level: 119.14
Major level: 118.75 <
The GLD closed at 121.43. Still biased for a move up to 121.88.
121.09 should be minor support. And 120.70 as well.
Short term charts remain bearish and resistance is at 121. The GLD broke back under the 121 resistance area. This area should be a key level today.
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 64.05. The key for today will be if the XLE can close above 63.28. If it can, it should move up to 65.63.
Support should still be at 62.50 and 63.28.
AAPL:
Major level: 212.50
Minor level: 210.94
Minor level: 207.81
Major level: 206.25
Minor level: 204.69
Minor level: 201.56
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
Apple closed at 197.10. 196.88 is a minor level. If Apple has two closes under 196.88, look for a drop to 187.50.
Minor support happens to be at 196.88. Watch the 196.88 level today.
Short term charts still remain bullish. If the market does hold and bottom out, Apple could be a great long.
WATCH LIST:
Bullish Stocks: NOW, FLT, LLL, WDAY, MCD, HRS, MKC, SAFM, WIX, TEAM, DRI, AWK, OLLI, ZEN, ROKU, PAYX, MNST,
Bearish Stocks: GOOGL, ILMN, GWW, TSLA, AMGN, NVDA, FFIV, BIDU, CAT, UPS, CTXS, AMG, SLG, PSX, NTAP, SQ, R
Be sure to check earnings release dates.