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
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 - $1.65
OI Long Feb $19 call @ $1.70
OI Short Feb $22 call @ $0.55
UNIT Long at $19.35
Total Premium Collected $0.45
PHM Long at $22.40
PHM Short Nov 2nd call @ $0.55
KMI Long (1) Nov 23rd-$17.50 call @ $.20
KMI Long (2) Nov 23rd-$17.50 put @ $.40
CELG Long Jan $75 call @ $3.60
CELG Short Jan $80 call @ $1.90
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We have one position that expires today and that is the short $23 call on PHM. PHM closed out about $1.60 above the strike price, so it appears highly likely that the calls will be assigned. Leave the position alone and allow them to be assigned.
You should have added two more positions yesterday. The first was a short term hedge position on KMI and the second was a longer term call debit spread on CELG.
I gave a lot of pressure points in yesterdays update. In case it was not clear, I just want to elaborate a bit on the levels I mentioned.
In various webinars, I discuss the significance of different support and resistance levels, but in case you do not have an opportunity to listen to them, I want to elaborate a bit further.
First off, I always believe that old support becomes resistance. So, once a support level is violated it becomes resistance. This applies to the resistance levels I share as well.
A recent example of this is the midband on the daily chart.
The midband is 2,742.40 and yesterday, the S & P 500 closed at 2,740.37. So it is now within 2 points of the midband.
Typically, when the midband is violated, it becomes resistance.
So, when price breaks under it, it becomes a resistance level. This would imply that when the midband is violated and price can get back through the midband, it represents strength.
It would also imply that if the price is under the midband and gets back above it, it now shifts to support.
And this morning, the S & P 500 is trading about 25 points higher, so it should clear the midband at the open which would mean that it should now become support.
The second concept I want to clarify is the resistance levels on different timeframes.
I mentioned yesterday the levels on different time charts.
Just to clarify, the levels become more important based on the timeframe of the chart. For example, a resistance level on a daily chart is more important than a level on a 60 minute chart.
And a level on a weekly chart is stronger than a daily chart.
Finally, a level on a monthly chart is more important than both timeframes. The key resistance level on the monthly chart at the moment is the 2,772.
2,772 happens to be the midpoint of the October monthly bearish long range candle.
The key with these pressure points is that we know what they are in advance and then can react based on what price does ... or doesn't do.
I always find that what price does not do is as important as what it can do. I know it sounds strange but it allows you to adjust to the market conditions.
For example, now that the S & P 500 should move above the midband on the daily chart, it should now become support.
I know this is intuitive but I did want to clarify it a bit further.
Yesterday, the S & P 500 continued its bounce. For the day it closed at 2,740.37, up 28.63 points on the day.
The range for the day was 32.82 points. Compared with the daily average true range of 48.70 points, the market may be stabilizing.
For the week, the S & P 500 is reversing nicely to the upside.
The midpoint of last week's weekly bar was 2,703.55. And yesterday closed about 36 points above it.
And pre open, the S & P 500 is trading about 16 points higher. This is before the NonFarm Payroll report at 8:30 AM EST. So, things could change.
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 19.37. A test of 18.75 is the likely scenario at the moment and 20.31 should be minor resistance.
15.63 should be minor support. And 17 is a technical support level.
SPX:
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
Minor level: 2,683.10
Minor level: 2,658.70
Major level: 2,646.50
Minor level: 2,634.30
Minor level: 2,609.90
Major level: 2,597.70
The S & P 500 should open above the 2,744 level. Watch for support at this level if the market does pullback.
Two closes above 2,756.33 and the S & P 500 should move up to 2,793.
Technical resistance is at 2,831.
QQQ:
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
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
The QQQ closed at 172.06. A close today above 170.31 and the QQQ should test 175.
168.75 should be support. And minor support is at 171.88.
And the midpoint of the monthly bar is 174. Watch this level on a rally.
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 153.49. Look for a move up to 156.25.
150 and 153.13 should offer support.
161 is technical resistance.
TLT:
Major level: 115.63
Minor level: 115.24
Minor level: 114.45
Major level: 114.06
Minor level: 113.67 **
Minor level: 112.89
Major level: 112.50
The TLT closed at 113.41. Starting to get a bid. Watch the major 112.50 level for support.
The midpoint of the monthly bar is 114.88 which is right around the minor resistance level. Where the TLT closes today should give us an indication as to whether this bear move can continue. And the odds favor more to the downside.
113.28 is minor support. And 114.06 should be resistance.
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 116.63. A close today above 116.41 and the GLD should test 118.75.
115.63 is minor support. And 117.97 is minor resistance.
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 67.73. Biased for a test of 68.75. And the XLE is within 70 cents of it.
67.19 is minor support. And minor resistance is at 70.31.
The midpoint of the monthly bar is 71.36. Watch this level on a rally.
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 84.80. Looking for a move up to 85.16.
84.47 should now be minor support. 84.57 should be minor support.
AAPL:
Major level: 231.25
Minor level: 229.69
Minor level: 226.56
Major level: 225.00
Minor level: 223.44
Minor level: 220.31
Major level: 218.75 <
Minor level: 217.19 **
Minor level: 214.06
Major level: 212.50
Apple reported and is trading to the downside about $14. This is why I suggested waiting until after earnings to consider a trade on Apple.
Watch to see if Apple can hold the 206.25 level. If it can't, a test of 200 would be the move.
WATCH LIST:
Bullish Stocks: AMT, PG, LW, WPC, O, PEG, SAVE, TWTR, KDP
Bearish Stocks: LMT, ANET, GS, FDX, BIDU, MMM, GD, BABA, DE, CMI, CAT, FANG, URI, RCL, ALL, SWKS, JACK, CELG, GILD
Be sure to check earnings release dates.