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 - $2.10
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 $0.80
AMC Long at $16.16
Total Premium Collected $0.35
GRUB Long June 7th $64.50 Call at $2.00
GRUB Short June 7th $69.50 Call at $.40
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Yesterday, I suggested a debit spread on GRUB. This is a short term trade and I cannot stress enough you do not want to overtrade this position.
Back to the market slide.
The market continues to sell off based on trade war fears and the uncertainty of how it will affect markets worldwide.
What is clear is that markets do not like uncertainty and quite frankly, until the trade issue is clarified, I don't see the market settling down.
And with the weekly inside bar formation last week, the price action is telling us to expect an expansion.
Yesterday, the S & P 500 closed 23.67 points lower. The day closed out at 2,802.39.
The range for the day was 38.93 points. This actually exceeded the average daily true range, which is now 33.85.
And the day closed at 2% of the daily range.
This all tells us that the price action is weak. Ranges are expanding to the downside. And with a close at 2% of the daily bar, the odds are almost 100% that yesterday's low should be violated before the high.
And this should happen right off the open. Pre open, the S & P 500 is trading about 16 points lower.
This projects to an open at around 2,786, which is about 15 points under yesterdays low, which was 2,801.58.
Assuming this trading holds up until the open, it would indicate that the market is severely oversold in the short term.
This projected open would be below the lower band on the 10 minute chart. The lower band is 2,791.39 and the open projects to 2,786 or about 5 points below it.
Of course this sets up a few expectations that we can anticipate.
The first of course is that a bounce could occur because of the oversold condition. I would not go long until you see a price bar close back above the lower band on the 10 minute chart.
This is similar to what I said on TSLA a few days back. When a stock is that oversold, the conservative entry is to wait for a close back inside the lower band. In the case of TSLA, it did happen to drift lower since I wrote that.
I will update the levels on TSLA tomorrow.
But with an anticipated open under the lower band on the 10 minute chart, we would expect another drop to the lower band after a rally.
Resistance levels from yesterday's daily bar is in the 2,816 to 2,821 area.
The key level on the downside is 2,792.98. And the projected open is just under it.
Watch this level today. Two closes under this level and the S & P should drop to 2,734.40.
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 yesterday at 17.50. So, it will need to closeabove 16.41 to test 18.75. The VIX is under this level by 1.15.
There is still minor resistance at 17.19. And it the VIX can break under 15.63, look for it to move lower.
The upper level on the VIX is 20.31. I don't see it exceeding this level, but if it does, look for the VIX to continue higher. (And the market lower)
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 < 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
The S & P failed yesterday at the minor 2,832.03 level. 2,763.70 is the outer level on the downside for the S & P. I don't see it getting violated, but if it does, look for further selling.
Of course, the key level fo watch for the short term will be 2,792.98. Two closes under this level and the S & P should drop to 2,734.
2,783.20 is also a minor level to watch today for possible support.
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 177.49. The QQQ broke under the minor 178.13 line.
At this point, a test of 175 is most likely.
Minor support is at 176.56 and 179.69 is minor resistance.
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 149.59. The IWM did break under the 150 level.
146.88 is the lower level that I do expect the IWM to break under. If it does, you can expect lower prices.
The IWM is oversold in the short term.
TLT:
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13 HIT!
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
Minor level: 124.61
Minor level: 123.83
The TLT closed out at 128.79. The TLT hit the 128.13 objective I have written about.
The TLT is right up against the upper band on the daily chart, which is 128.64.
With a close above it, the TLT is showing strength.
128.52 is minor support.
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< < HIT
Minor level: 119.92
Minor level: 119.14
Major level: 118.75
The GLD closed at 120.83. With a close above 120.70, I would expect the GLD to test 121.88.
120.70 should be minor support now. And 121.48 is minor resistance.
The 30 60 minute chart is in a downtrend. Technical resistance is at 121.10.
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 60.98. The XLE has broken down.
At this point, 60.16 is the outer support level for the XLE. If this does not hold, look for further selling.
Longer term the major 59.38 level will be the key. If the XLE does have two closes udner 59.38, a drop to as low as 50 will be possible.
62.50 should now be resistance.
Short term the XLE is oversold and could bounce. Technical resistance is at 63.50.
AAPL:
Minor level: 203.13
Major level: 200.00
Minor level: 196.88
Minor level: 190.63
Major level: 187.50
Minor level: 184.38
Minor level: 178.13 **
Major level: 175.00 <
Minor level: 171.88
Minor level: 165.63
Major level: 162.50
Apple closed at 178.23. At this point, I expect a drop to 175.
A mentioned that longer term, I can see a drop to 150 on Apple. Here is what I am looking at.
First, is a drop to 175. If 175 can hold and Apple bounces at that level, I don't see Apple moving higher than 200. It may not break 187.50.
If Apple does break under 175, then I would ecpect a drop to 162.50.
Price action is clearly bearish and rallies should be taken as an opportunity to go short.
WATCH LIST:
Bullish Stocks: LLL, SBAC, AMT, CME, SAGE, KMB, HSY, RACE, ROKU, ED, WELL, WING
Bearish Stocks: AMZN, GOOGL, NFLX, ADBE, GS, TSLA, FDX, NVDA, FFIV, CXO, CTXS, RH, PSX, VLO, XOM