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
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DUST Long $4.50
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SNAP Long at $14.54
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OI Long Feb $19 call @ $1.70
MDR Long @ $9.31
FB Long Feb $135 Call @ $10.60
FB Short Feb $145 Call @ $5.90
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The market continued to bounce yesterday, closing to the upside 8.75 points. For the day, it closed at 2,682.20.
This now puts the upside objective to the 2,695.30 level. And yesterday's high was 2,682.53 which puts the market within 13 points of the objective.
Yesterday's low was 2,655.89. I mention this because the support from Monday's daily bar was around 2,662. So, the low came about 6 points lower than the price bar support.
I bring this up because once again it shows that these levels are not perfect but general areas to look for support. The major concept is the close percentage which gives you the odds of the direction of the violation.
And for yesterday, the odds of violating the high before the low were around 95%.
So, if you do trade intraday, you are looking for support to come in and buy with an objective to Monday's high ... or more.
Knowing this general pattern, how would you have done yesterday?
The market opened on a bearish down gap and proceeded to drop to a low of around 2,656 which was 6 points under the prior day's support level.
On a short term intraday 3 minute chart, this also happened to be the midband which we know should offer support.
From that price, it ran up to a high of 2,676 which was about 2 points higher than Monday's high. The high hit at 10:12 EST and the low came in at 9:40 EST.
So, in less than one half an hour, you captured the objective for the day and about 20 S & P 500 points.
After that high, the market basically consolidated until around 1:00 EST when it made another run. The second run was about 16 S & P 500 points.
And the low before that run was 2,665 or about 3 points above Monday's price bar support level.
Because the S & P 500 had already taken out the prior day high, the price objective on the second run was to a retest of the current intraday high. And the market complied taking out the intraday high by about 1 point.
By just knowing two pieces of information from Monday, you could craft how the day should trade the next day.
Where this gets a bit confusing is when price gaps up and takes out the prior day when your objective is a higher high. Or I should say, you expect a violation of the high before the low.
For example, yesterday's closing percentage was 99%, which puts the odds of violating Tuesday's high before the low at almost 100%.
As I write this, the S & P 500 is trading about 12 points higher before the open.
This projects an open at around 2,694 or about 12 points above yesterday's high.
So, essentially, the closing percentage objective will be satisfied at the open.
This brings up a dilemma as to what your price objective should be and where support should be.
I would prefer a lower open with an objective to take out the prior day high.
In this situation, we need to look at roughly 1/2 the gap and the prior day high.
1/2 the gap would be around 2,688 and Tuesday's high was 2,682.53.
These levels generally offer support on a bullish gap.
The other pattern is this.
Look at the first 30 minute price bar. If the second bar closes above the high of the first 30 minute bar, it is possible the move up should continue.
But, wait for the second bar to close. Don't jump the gun.
Tomorrow we will see how these scenarios shape up.
Saleforce.com, Inc (CRM) reported last night and is trading about $11.50 or 9.03% higher pre open.
Support from yesterday's daily bar is in the 2,770 to 2,773 area.
Continue to monitor the levels as I mentioned above.
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 19.01. For the day, it was up 11 cents.
18.75 should offer support. But to move lower, the VIX will need to close under 17.19.
On the upside, 20.31 should be resistance. Along with 22.66.
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 <
Minor level: 2,634.30
Minor level: 2,609.90
Major level: 2,597.70
By closing above 2,658.70 for a second consecutive day, the objective for the S & P 500 is to the 2,695.30 level.
The minor 2,684.10 level should offer support. And watch to see if the S & P 500 can clear the minor 2,700.20 level. If it can, it would be bullish. Target now is about 5 points under it.
2,694.40 should also be a minor support level.
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 163.44. It closed 0.55 points higher. The QQQ cleared the major 162.50 level. This now suggests that 162.50 should be support.
To move higher, the QQQ will need two closes above 164.06.
164.06 should be resistance until the QQQ can close above it.
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 148.57. Watch to see if the minor 148.44 level can hold as support. Two closes under this level would suggest a move down to 143.75.
150 should still be resistance until it is taken out.
The short term 60 minute chart is close to crossing into an uptrend. If it can, I would expect the IWM to head higher.
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
Minor level: 112.11
Minor level: 111.33
Major level: 110.94
The TLT closed at 115.01. Watch to see if the TLT can reclaim the minor 115.24 level. If it can't, it would suggest a drop to 114.
Short term charts remain bullish, implying the TLT should find support and make another run.
114.45 should offer short term 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 114.95. The major 115.63 level should now be resistance. The GLD would need two closes under 114.85 to drop to 112.50.
The GLD dropped under the midband on the 60 minute chart. That level is 114.40 and should now be resistance.
114.06 is minor support. 115.23 is minor resistance.
Short term charts are bearish.
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 64.69. The XLE closed back under the 64.85 level. This now suggests that if the XLE can close under 64.85 today, it should drop to 62.50.
65.23 is minor resistance. And minor support is at 64.06.
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 83.98. The objective should be down to 83.59.
As I said, the recent upmove has been a bounce in a bear market.
83.59 should be minor support and 84.18 is minor resistance.
AAPL:
Minor level: 204.69
Minor level: 201.56
Major level: 200.00 <
Minor level: 198.44 **
Minor level: 195.31
Major level: 193.75
Minor level: 192.19
Minor level: 189.06
Major level: 187.50
Minor level: 185.94
Minor level: 182.81
Major level: 181.25
Minor level: 179.69
Minor level: 176.56
Major level: 175.00
Apple closed at 174.24. It was down $0.38 on the day. I would like to see a few days where Apple consolidates down around these levels.
It does look like we are getting the consolidation I would like to see. Pre open, Apple is trading about $2.00 higher.
Getting excited that Apple is bottoming out. I would like to see a close or two above $175 before dabbling long.
168.75 should offer support. And 178.13 is minor resistance.
WATCH LIST:
Bullish Stocks: CLX, UHS, LLY, KMB, UAL, DUK, OMCL, BKH, DAL, FL
Bearish Stocks: BKNG, GOOGL, BA, DIA, GS, FLT, BIDU, NVDA, FB, RACE, OLED, EA, SWKS, WLK, GILD
Be sure to check earnings release dates.