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
Premium collected - $1.25
NCR Long Jan 16 $27 Call
Net Debit - $.80
X Long at $14
Premium collected - $.89
ASNA Long at $14.20
Total Premium collected - $.75
Short Nov $14 Call - $.45 collected
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The markets finally broke down yesterday after the strong upmove from the end of September.
The VIX gave us the clue that the markets should break.
First, the 17.19 level in the VIX was breached early in the day.? And the S & P broke under the 2,062.50 level.
Once that happened, that level now becomes resistance and that is what happened.
Around 1:30 yesterday, the S & P rallied back to test 2,062.50 and failed at 2,061.94.
At that point, the VIX reversed and headed higher, moving up to test the 18.75 level.
The VIX closed just under that level at 18.37.
Today, the 18.75 should be rather significant.
If the VIX can get through it, look for the markets to head lower.? If it can't, then I would expect that this sell off will come to an end.
Another fact about yesterday is that the down to up volume hit 9.28.? It does not mean the markets will turn on a dime, but it indicates that a selling climax was made yesterday.
Here are the key levels for the markets.
?
VIX:?
Major level - 25.00
Minor level - 23.44
Minor level - 20.31
Major level - 18.75 *
Minor level - 17.19
Minor level - 14.06
Major level - 12.50
The VIX took out the 17.19 level and the key level to watch is now 18.75.
I do not expect the VIX to take out 20.31, but if it does, you would certainly expect the markets to head lower.
A reversal to the downside on the VIX is the indication the markets should head lower.
S & P 500 Cash Index:?
Major level - 2,125.00
Minor level - 2,117.17
Minor level - 2,101.62
Major level - 2,093.80
Minor level - 2,085.98 *
Minor level - 2,070.33 *
Major level - 2,062.50
Minor level - 2,054.68
Minor level - 2,039.12
Major level - 2,031.30
2,046.90 is a short term support level for the S & P 500.? If it does close under this level today, the market could drop to 2,015 or 2,000.
I would expect 2,000 to be strong support.
Nasd 100 (QQQ):?
Minor level - 116.41
Major level - 115.63
Minor level - 114.85
Minor level - 113.28 *
Major level - 112.50
Minor level - 111.72 *
Minor level - 110.16
Major level - 109.38
Two closes under 111.72 and the QQQ should move down to 109.
111.72 should be strong support.? So if it is breached, look for lower prices.
TLT:?
Major level - 125
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 - 117.97
Minor level - 116.40
Major level - 115.62
The TLT closed back above the 118.75 level.
It would need two closes above 119.53 to move up to 122.
GLD:
Major level - 112.50
Minor level - 111.72
Minor level - 110.16
Major level - 109.38
Minor level - 108.60
Minor level - 107.03
Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13
Minor level - 102.34
The GLD is trading around the 103.13 level.
I would expect 104.70 to be resistance, so if it gets through that level, look for further movement on the upside.
XLE:
Minor level - 75.78
Major level - 75.00
Minor level - 72.66
Major level - 71.88
Minor level - 69.53 *
Major level - 68.75
Minor level - 67.97 *
Minor level - 66.41
Major level - 65.63
The XLE is almost back to the 65.63 level.
This is a level where I would support.
Apple:
Major levels for Apple are 125, 118.75, 112.50, 106.25, 100, and 93.75.
106 should be a major support level for Apple.?
Apple continues to try and hold the 115.63 support level.
Yesterday's low was 115.65 or two cents above it.
If it fails at 115.63, look for a move down to 112.50.
Watch list:
Bullish Stocks: CHTR, AMZN, NTES, FB, DIS, TAP, DY, MA, ADBE, V, JPM, QIHU, AWAY, NVDA
Bearish Stocks: IBM, ANTM, TLT, FFIV, CMI, VRX, HSY, UNP, VRX, JACK, DECK, EAT, WFM
Be sure to check earnings release dates.
