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 $15.20
Premium Collected - $2.79
AMC Long at $15.27
Short Dec $16 call @ $1.20
Premium Collected - $2.18
THC Long at $14.63
Premium Collected - $1.40
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If you are long AMC stock, you should have sold the December $16 call yesterday. As a reminder, you only sell calls on stock you own. I will never recommend selling calls without a commensurate long stock or option position, to offset the short position.
As a bit of housekeeping, I mentioned on yesterday's webinar an old topic I have not brought up in a while. And that is the trading of companies that have announced stock buyback programs.
It was quickly pointed out to me on the webinar that the last posting was in December 2016.
I can now say that the postings are up to date. And I apologize for the snafu.
There are a number of reasons why I like companies that are buying back their shares and I discuss a few of them on yesterday's webinar. You can listen to the recording in the member's area.
Back to the markets.
One of your fellow members proposed a question about convergence / divergence on the major markets. I suspect the question was rather timely because that is exactly what happened yesterday.
The DOW closed to the upside and the S & P 500 had a modest loss. At the same time, the NASD Composite closed down 87.97 points or 1.27%. Naturally, the QQQ closed to the downside as well. The QQQ lose even more, closing down 1.74% or a loss of 2.73 points.
You generally want all markets moving in the same direction and yesterday they certainly didn't.
The divergence I pointed out yesterday is when the S & P 500 and the VIX both close in the same direction.
And that is what happened on Tuesday. They both closed to the upside. The result was a minor loss yesterday in the S & P 500.
The last time both they both closed to the upside was on Monday, November 13th.
The S & P closed at 2,584.84 that day. Two days later, the S & P closed at 2,564.62. The low that day was 2,557.45.
So, the market pulled back about 28 points after the divergence.
I bring this up because this a divergence I track daily. And you will be amazed to see how many times it can pick a turning point in the market. IT at least warns you that something is out of the ordinary.
The S & P 500 could close above 2,626.98 yesterday. It closed just short of it, at 2,626.07. We will have to see today if the S & P 500 can hold the 2,626.98 line. If it can, the objective should be to 2,656.30.
As for the NASD Composite, I would expect support at the 6,719 level.
Pre open, it appears all markets should open to the upside.
Continue to follow the resistance levels.
Here are the Key Levels for the Markets:
$VIX:
Major level: 14.06
Minor level: 13.67
Minor level: 12.89
Major level: 12.50
Minor level: 12.11
Minor level: 11.33
Major level: 10.94 <
Minor level: 10.55
Minor level: 10.16 **
Major level: 9.38
Minor level: 8.99
Minor level: 8.20
Major level: 7.81
The VIX closed 10.69. The high for the day came in at 10.93, just one cent under the major 10.94 level.
I still expect resistance at 10.94. So, watch this level today. If the VIX gets through it, the markets should continue to pullback.
Strong resistance should still be at 12.50 in the event the VIX takes out 10.94.
$SPX:
Major level: 2,656.30
Minor level: 2,646.53
Minor level: 2,626.98 **
Major level: 2,617.20 <
Minor level: 2,607.43
Minor level: 2,587.88
Major level: 2,578.10
Minor level: 2,568.35
Minor level: 2,548.85
Major level: 2,539.10
Minor level: 2,529.33
At this point, 2,617.20 should be support. And watch to see if the S & P can close above 2,626.98 today. On an open above it, I would expect it to offer support on a pullback.
Minor support is at 2,612.30.
QQQ:
Major level: 162.50
Minor level: 160.94
Minor level: 157.81 **
Major level: 156.25 < Hit
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
Minor level: 150.78
Major level: 150.00
The QQQ closed at 153.86. The low for the day was 153.12 or one cent under the major 153.13.
The QQQ dropped one level yesterday. I would not expect the QQQ to drop below 150 on a further sell off.
Minor support is at 152.35, but watch to see if 153 holds.
IWM:
Major level: 153.13 **
Minor level: 152.35
Minor level: 150.78 <
Major level: 150.00
Minor level: 149.22
Minor level: 147.66
Major level: 146.88
Minor level: 145.32
Minor level: 144.53
The IWM closed at 153.37. The IWM took out the 153.13 objective.
152.34 should be minor support. And watch to see if the IWM can clear 154.69.
TLT:
Major level: 128.13
Minor level: 127.35
Minor level: 125.78 **
Major level: 125.00 <
Minor level: 124.61
Minor level: 123.83
Major level: 123.44
Minor level: 123.05
The TLT gapped down and closed at 125.54. The major 125 level should be support.
I don't see the TLT falling under 124.22, but if it does, expect it to drop lower.
GLD:
Minor level: 125.78
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
Major level: 121.88 <
Minor level: 121.10 ***
Minor level: 119.53
Major level: 118.75
The GLD closed at 122.04. With a break under the 121.88 level, look for that to be resistance.
And if the GLD breaks under 121.48, I would expect it to drop lower.
XLE:
Major level: 73.44
Minor level: 72.66
Minor level: 71.09
Major level: 70.31
Minor level: 69.92
Minor level: 69.14
Major level: 68.75 <
Minor level: 68.36
Minor level: 67.58 **
Major level: 67.19 <
Since stopping on the 67.19 level, the XLE has moved to 68.08 on two days.
Next level on the upside is 69.14. Two closes above 69.14 and the XLE should test 70.31.
It is now back above the midband on the daily chart. That price is 67.74. This level should now be support.
FXY:
Major level: 86.72
Minor level: 86.53
Minor level: 86.14
Major level: 85.94
Minor level: 85.75 <
Minor level: 85.36
Major level: 85.16 **
Minor level: 84.96
Minor level: 84.55
Major level: 84.38
The FXY gapped down and closed at 85.80. 85.36 should be support.
I don't see the FXY dropping under 85.16. I would expect support at that level.
AAPL:
Major levels for Apple are 175, 171.88, 165.63, 162.50, 159.38, and 156.25.
Yesterday, Apple closed at 169.48. The 165.63 level should provide support.
Possible double top forming. The 30 minute chart has crossed into a downtrend. Resistance from that timeframe should be at 172.
WATCH LIST:
Bullish Stocks: NTES, AVGO, BA, SPY, BDX, STZ, ILMN, WYNN, ACN, DE, MA, CLX, RHT, WDAY, CBOE, LULU, VTR, CCL
Bearish Stocks: GS, MLM, AYI, TSRO, WAB, AIG, PZZA, WIX, PAG, OTEX, TBT, EPD, AR
Be sure to check earnings release dates.