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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It is really starting to look like and feel like this market has rolled over into a bear market.
The only thing we have not seen at this point is a flash crash.
With machines doing a lot of the trading these days, I keep thinking we may see one yet. I know they have supposedly put procedures in place to prevent one, but when selling becomes overwhelming there is nothing that can really prevent one.
And with this selling, I want to review the various critical price levels at the moment.
Because we have our webinar tomorrow, I will review where all the major markets stand on their respective monthly and weekly charts.
The discussion will pertain to the S & P 500 and its support and resistance levels.
The balance of the markets I will review tomorrow.
From a technical standpoint, the major recent price activity centered around the midband on the daily chart.
The midband now reads 2,749.99. Call is 2,750.
As I have stated, the first time a market approached the midband, I usually expect support. When it is violated, it now becomes resistance.
On the first wave down, the S & P 500 violated the midband twice. After the second violation, it did manage to reverse above it.
The next sell off out the market is back under the midband.
In the last week, we have had three tests of the midband where the high for the day was just under the midband.
Yesterday, the S & P 500 moves squarely under the midband.
I bring this up because after the midband is violated, the lower band usually becomes the objective.
The midband is 2,523. This level is very close to a major support level which happens to be 2,500.
Yesterday closed out at 2,690.73, there is another 170 points of possible movement to the downside.
I say possible because the next major level for the S & P 500 is 2,646.50. How the market reacts at this level should tell us if the market will continue down to 2,500.
If the S & P 500 has two closes under 2,646.50, I would firmly expect a continuation of the selling. And at that point, the target would become 2,549 and possible to 2,500.
And speaking of resistance levels, in two days the market dropped one level. It ran from 2,744.10 on Friday to close just under 2,695.30.
The next major level to the downside is 2,683.10. Two closes under this level and the objective becomes the 2,646.50 level.
The way this market has traded, this could be hit tomorrow. Or even today.
Pre open, the S & P 500 is trading 38 points lower, so the market may hit the 2,646.50 level today.
And by the way, yesterday's closing percentage was 19%, which puts the odds of violating yesterday's low before the high at about 80%. This should most certainly be achieved at the open.
Resistance from yesterday's daily bar is in the 2,707 to 2,710.
I contemplated cancelling tomorrow's webinar because of the Holiday on Thursday, but I feel this move is too important not to review where the market is at the moment.
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 20.10. It is back above the major 18.75 level.
Watch the 20.31 level today. Two closes above 20.31 and the VIX should run up to 25.
18.75 should be strong support.
SPX:
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 <
Minor level: 2,683.10 **
Minor level: 2,658.70
Major level: 2,646.50
Short term, look for resistance at 2,725 and 2,700.
On the downside, watch the 2,675 level. If the S & P 500 reaches under 2,675, look for a continuation 2,6022.
QQQ:
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 162.06. The next level on the downside is 160.94. Two closes under 160.94 and expect the QQQ to drop to 156. We probably hit it today.
As I said a few days ago, I expect a drop to 150.
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 148.86. Watch the 148.44 level. Two closes under 148.44 and the IWM should drop to 143.75.
Downslide far from over. A break under 143.75 and the IWM continue lower.
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 continued its bounce and closed at 115.02. The objective is now to 115.63.
114.45 is minor support. And 116.41 is 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 115.67. The GLD is just above the midband on its 30 minute chart. The midband is 115.62 which is one penny under the major 115.63 level.
The GLD will need to clear this level to head higher. If it can, it would then become support. A clear move away from the midband and the GLD should continue higher.
115.23 is minor resistance. 116.41 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 67.16. The XLE should test 68.75, but with the overall weakness, it is best to stay out.
66.41 is minor support. And 68.75 is resistance.
Technical resistance is at 67.53.
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 84.90. The FXY should test 85.16.
The FXY would have to move up to the 86 area for me to be convinced that this downtrend is over. Still a bounce in a bear market.
84.57 is minor support. And resistance is at 84.96.
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 firmly under the midband on the daily chart. The lower band is 135 and a possible downside objective for Apple.
Downside objective based on the resistance levels is to 175. Technical target is 40 lower.
WATCH LIST:
Bullish Stocks: CME, MCD, AAP, CLX, VMW, UHS, VRSK, DATA, HSY, CTSX, GPC, ATO, XLNX, ICE, OMC, GOOS, ROL, HLF, FL, THS, TWTR
Bearish Stocks: GS, NVDA, FB, STMP, FB, OLED, SWKS, CELG, DVA, EBIX, KORS, SLB, DVN, HAL
Be sure to check earnings release dates.
