While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to 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
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FEYE Long at $13.65
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Short May 12th-$14.50 Call - ($0.31)
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The S & P 500 continues to contract and trade in a narrow range.? Yesterday closed at 2,399.38, up just .09 on the day.? And the range for the day was only 7.44 points.
The average true range (ATR) continues to contract. The ATR is now 13.75 points.? So yesterday's range was about one half the ATR.
The high for the day was 2,401.36.? This is now within 5 points of the objective of 2,406.30 I have been calling for.
With the S & P 500 trading to the upside before the open, I suspect the objective will be hit today.
I received an email from a long time member who I know diligently reads the daily updates and follows the price levels I share.
He asked a basic question which I thought I would share with you.
His question was how can you use the levels to make trades?
This is something I try and cover on the webinars and perhaps do not do a great job of explaining to enhance your trading.
The first thing you need to assess when looking at the levels is to determine the trend direction.? As I have tried to point out, the trend for the S & P 500 remains bullish. We know this simply because the market continues to hit its upside objectives.
In fact, it has been long time since the S & P 500 has not hit its objective after confirming a move to the upside.
Using the S & P 500 as example, then you know you will be more profitable trading to the longside rather than the short side.
So now that we have identified the major direction we should be trading in, the question becomes when do you enter?
And this is where the levels can be helpful.
For example, after the S & P 500 rose to about 2,400, support was down at 2,382.82. If you look at a 30 minute chart for the S & P 500, there were four instances last week the market bounced off that level.
Trades can be initiated at the support levels.
Deciding on how to structure the trade is a whole different conversation.
Do you like to use credit spreads?? Or do you prefer directional trades.
It is really a personal preference.
The other thing I like to look at is the 30 minute and 60 minute charts.
For example, the 30 minute chart for the S & P 500 crossed into an uptrend on the 25th of April.? This shows short term momentum coming into the market.
The 60 minute chart crossed into an uptrend on May 1st.? So, now that both short term charts are in uptrends, it signifies strength.? And certainly tells you yo avoid shorting.
I hope this has been helpful and if you have any questions please feel free to email me.
Support from last week's weekly price bar should be in the 2,390 to 2,394 area.
Here are the Key Levels for the Markets:
$VIX:
Minor level: 14.45
Major level: 14.06
Minor level: 13.67
Minor level: 12.89
Major level: 12.50
Minor level: 12.11
Minor level: 11.33
Major level: 10.94 <
Minor level: 10.55 <
Minor level:? 9.77
Major level:? 9.38 Strong support
The VIX continues to collapse and closed at 9.77, down 7.57% on the day.
The objective should be to 9.38. And the VIX is within 40 cents of it.
Downside support should be at 8.98.? Never thought I would be writing this.
$SPX:
Major level: 2,406.30 <
Minor level: 2,398.48 **
Minor level: 2,382.82
Major level: 2,375.00
Minor level: 2,367.20
Minor level: 2,351.60
Major level: 2,343.80
Minor level: 2,335.98
Objective is still to 2,406.30.
2,398.40 should offer support now.
On the upside, 2,402.30 is a minor resistance level.
QQQ: ?
Major level: 140.63
Minor level: 139.85
Minor level: 138.28 **
Major level: 137.50 <
Minor level: 136.72
Minor level: 135.16
Major level: 134.38
Minor level: 133.60
To move up to 140.63, the QQQ needs two closes above 139.85.
138.28 is a minor resistance level.? And 137.50 should offer major support.
IWM:
Minor level: 141.41
Major level: 140.63
Minor level: 139.85
Minor level: 138.28 ***
Major level: 137.50 <
Minor level: 136.72
Minor level: 135.16
Major level: 134.38
The IWM did close above 138.28. This now implies a move up to 140.62.
137.50 should continue to offer support. 139.84 could offer minor resistance.
TLT: ?
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88 <
Minor level: 121.09 **
Minor level: 119.53
Major level: 118.75
Minor level: 117.96 ?
The TLT closed under 121.09.? It closed at 120.63.? A close today under 121.09 and the TLT should drop to 118.75.
The TLT continues to inch closer to a downtrend on the 60 minute chart.
119.53 should be minor support ad 121.48 resistance.
GLD: ?
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88
Minor level: 120.32
Minor level: 119.53
Major level: 118.75 <
Minor level: 117.97
Minor level: 116.41
Major level: 115.63 <
The downside objective is 115.63.
117.97 should be minor resistance.? And 114.06 minor support.
XLE:
Major level: 75.00
Minor level: 74.22
Minor level: 72.66
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
The XLE closed at above 66.41.? It should test 68.75.
68.36 should be minor resistance.? 67.19 could offer minor support. ?
FXY:
Major level: 89.06
Minor level: 88.67
Minor level: 87.89
Major level: 87.50
Minor level: 87.11
Minor level: 86.33
Major level: 85.94? <
Minor level: 85.55 ***
Minor level: 84.77
Major level: 84.38
The FXY closed under 85.55.? A close today under 85.55 and the downside objective should be to 84.38.
85.35 should be minor resistance.? And 84.77 should be minor support.
AAPL:
Major levels for Apple are 150, 143.75, 137.50, 131.25, and 125.
Apple took out the 150 objective, closing at 153.01.
At this point, 150 should be support.? The next objective is to 162.50.
WATCH LIST:
Bullish Stocks: PCLN, GOOGL, REGN, NOC, HUM, MMM, GD, AET, ALGN, ADBE, RCL, SWKS, KLAC, CBOE, CCL, CTSH, SSYS, BBRY
Bearish Stocks: FLT, SJM, ATHN, THS, DVA, TCO, OXY, CLR, EDR, BSFT
Be sure to check earnings release dates.
