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.
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Yesterday surged to the downside. The S & P 500 closed at 2,726.22. For the day, it was down 54.79 points.
With a range of 53.99 points and an average true range of 45.58 points, it certainly qualifies a long-range candle.
And it closed at 8% of the daily bar which puts the odds of violating the low of 2,722.00 before the high of 2,775.99, at over 90%.
And the resistance level from yesterday's daily bar should be in the 2,750 area. At least this should be an area to watch for a possible reversal if there is a rally or bounce.
The down to up volume yesterday was only 4.87 which suggests that this sell off is not over.
I would have preferred a selling climax but we did not get one.
The other major bearish factor at the moment is this.
I have discussed the midband on the daily chart recently. And rightfully so because the market has traded around it.
The first time the market approached it, it did bounce. This was on October 1st.
The market rallied a few days off the bounce at the midband and then proceeded to fail.
The failure brought the S & P 500 back under the midband. It based from that oversold condition and managed to get back above the midband.
Yesterday, the market extends to the downside and closed under the midband. This, of course, is bearish.
The midband is now 2,747.28 which is very close to the resistance level from yesterday's daily bar. I suggest there should be strong resistance around this area.
So, once again now that price is under the midband, it should be resistance.
I do want to remind you that the lower band on the daily chart is 2,512. I recall at one time saying that a pullback could go as far as the 2,500 level and the lower band gives us a logical target to that level.
I also want to mention that the S & P 500 is back under the upper band on the monthly chart. The upper band is now 2,740.89 and yesterday closed about 15 points under it.
The final comment I have about the market at the moment is this.
The daily chart is still clinging to an uptrend. But, the 200 ema is starting to move down and approach the 253-day average.
The 200 ema is 2,755.28 and the 253-day average is 2,747.28.
If the daily chart can cross into a downtrend, it would most certainly indicate further downside price action.
The other key price level to watch for today is last week's low which was 2,717.94. The weekly price bar suggested odds that favored the high being violated before the low, so a violation of last week's low would be quite bearish as well.
Earnings continue this week. The big report that will be closely followed will be Nvidia. NVDA reports Wednesday after the close.
Pre open, the market is trading to the upside. The S & P 500 is trading about
10 points higher.
Continue to monitor the levels as I mentioned.
Here are the Key Levels for the Markets:
$VIX:
Major level: 31.25
Minor level: 29.69
Minor level: 26.56
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 closed at 20.35. The VIX surged 17.28%, which you would expect on a bearish day like yesterday.
This now suggests that if the VIX closes above 20.31 today, it should move up to 25. On the downside, watch the 17.19 level.
21.88 is minor resistance. And 19.53 is minor support.
SPX:
Major level: 2,841.80
Minor level: 2,829.60
Minor level: 2,805.20
Major level: 2,793.00
Minor level: 2,780.78
Minor level: 2,756.33
Major level: 2,744.10
Minor level: 2,731.90 **
Minor level: 2,707.50
Major level: 2,695.30 <
With a close today under 2,731.90, the S & P 500 should drop to 2,695.30.
Look for resistance at 2,732 and at 2,744.
2,702 should be minor support.
QQQ:
Major level: 178.13
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 **
Minor level: 164.06
Major level: 162.50 <
The QQQ closed at 166.33. "This now suggests that if the QQQ closes under 173.44 today, it should test 168.75." It certainly accomplished that and closed under the next downside level.
A close today under 167.19 and the QQQ should drop to 162.50.
Also, like the S & P 500, the QQQ closed under the midband on the daily chart. That level is 168.88.
168.75 should be resistance.
IWM:
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
Minor level: 145.31
Major level: 143.75
The IWM closed at 151.03. The midband did offer resistance.
Watch to see if the 150 level holds any support at all. 153.13 should be minor resistance. And there is technical resistance right at that level.
TLT:
Major level: 115.63
Minor level: 115.24
Minor level: 114.45
Major level: 114.06 Hit!
Minor level: 113.67
Minor level: 112.89 **
Major level: 112.50
Minor level: 112.11
Minor level: 111.33
Major level: 110.94
The TLT closed at 114.09. The TLT hit the 114.06 objective. To move higher, the TLT will need to move above 114.45.
We got the bounce from its oversold condition and we were expecting it.
113.60 should now be technical support.
GLD:
Major level: 118.75
Minor level: 117.97
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
The GLD closed at 113.66. Biased for a move to 112.50.
114.06 should be minor resistance.
Short term oversold so a bounce could happen.
XLE:
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 <
Minor level: 64.85
Minor level: 63.28
Major level: 62.50
The XLE closed at 67.08. A close today under 67.97 and the XLE should drop to 65.53.
The short term 30 minute chart has crossed into an uptrend. And the midband is 69. The XLE will need to clear this level to move higher.
And 68.75 should be resistance.
FXY:
Major level: 85.94
Minor level: 85.75
Minor level: 85.36
Major level: 85.16
Minor level: 84.97
Minor level: 84.58
Major level: 84.38 <
Minor level: 84.18
Minor level: 83.79 **
Major level: 83.59 <
The FXY closed at 83.99. If the FXY can close above 83.79 today, it should head up to 84.38.
But if the FXY can move up off the 83.59 level, it should continue higher.
83.89 is a short term level that should offer support. If the FXY breaks under it, I would expect it to head lower.
AAPL:
Minor level: 214.06
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
Apple closed at 194.17. It certainly took out the 200 level. Looks like it should head lower.
At this point, if Apple has two closes under 198.44, it should drop to 193.75.
And if Apple closes for two days under 193.75, it could drop to as low as 175. If it can do this, it should be an excellent day to buy Apple.
187.50 is the midband on the daily chart.
WATCH LIST:
Bullish Stocks: CMG, COST, CME, ZBRA, CLX, DXCM, DIS, DATA, HSY, GPC, ESRX, UAL, EXR, WBA, LW
Bearish Stocks: NVDA, FB, CXO, FANG, EA, CLB, SLB, SRCL, WDC
Be sure to check earnings release dates.
