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:
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PHM Long Dec $25.50 put @ $0.80
PHM Short Dec $24.00 put @ ($0.35)
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After the long range day on Wednesday, the market paused yesterday. Of course, this is not unusual. And a two-day pause would not be unusual.
For the day, the S & P 500 closed 5.98 points lower, at 2,737.80.
The low for the day was 2,722.94 which was about 6 points above the upper end of the daily support level from Wednesday.
The key for today is that we close out the month of November.
There are a few key pressure points that will be critical for this market going forward.
The main one being the upper bollinger band on the monthly chart. That level is 2,741.23. And yesterday closed about 5 points below it. Reclaiming this level would be bullish.
The other key for the monthly outlook is the midpoint of the monthly bar. As I mentioned yesterday, the midpoint is 2,723.12. And we closed yesterday about 5 points above it.
So, we have two key long term levels that should come into play today.
The final key price level is the midpoint on the daily chart. That price level is 2,752.26. And yesterday's high of 2,753.75 fell short of it by about 1.50 points.
The market would have to clear this level to move higher.
The market is also right around the major 2,744.10 resistance level. As I previously mentioned, the run we have had has been a two-level move. Most bear moves do not exceed two levels. So from the standpoint of the resistance levels, the key will be if the S & P 500 can extend this move another level which would be to 2,793.
We know for the market to head lower, it will need two closes under 2,731.90 and yesterday we closed above it. That level should be support until it is violated.
I do want to point out that the S & P 500 had a bearish crossunder yesterday. This is a long term cross over and it is when the 200 ema crosses under the 253-day simple average.
Because they are long term averages, I view this technical condition as rather significant.
The last time this happened was back in August of 2015. After that happened, the S & P 500 dropped to the lower band on the daily chart. You may recall the sell off into the bottom of February of 2016.
That was when the S & P 500 bottomed out at 1,810.10.
Of course, from that level, the S & P 500 went on to hit a high of 2,940.91 this year.
This was a swing of almost 62.5%.
If this happens again, it would project a low down to 2,532, which is the lower band on the daily chart.
And if this were to happen, it would suggest the S & P 500 could drop another 200 points or so from this level.
In addition to closing out the month of November, today also closes out the week.
At this point, the midpoint of the weekly bar would be 2,701.86. A close under it would be bearish. The market would have to drop about 36 points today to close under it.
I also want to point out that last week's high was 2,733.16 and that yesterday, the market closed just above it.
A close above 2,733.16 would be extremely bullish.
I know I have shared a lot of price levels that may seem confusing. But, remember the longer the timeframe, the more significant the price becomes.
Finally, the support level from the long range bar from Wednesday should still be valid. That area is around 2,714 to 2,718.
Pre open, the S & P 500 is trading about 13 points lower.
WDAY is up almost 8% this morning off their earnings.
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 18.79. It closed up 0.30 for the day.
18.36 should still be minor support. A break under this level and the VIX should continue lower. 19.14 should be resistance.
The VIX has stalled out right around the major 18.75 level. I don't expect that for much longer.
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
At this point, minor support should be at 2,714.80 and 2,727.10.
The minor 2,714.10 level is right around the support level from the daily long range bar from Wednesday. I would expect strong support here.
On the upside, the key is the daily midband which is 2,752.26.
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 168.15. It closed 0.55 points lower. Like the S & P 500, the QQQ is just under the midband on the daily chart. That level is 169.39.
The support level from Wednesday's bar is around 166. And the 165.63 support level should be valid on the downside.
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
Like all markets yesterday, the IWM paused as well. It closed at 151.83, down 0.41 on the day.
But, it did close above 151.56, which suggests the objective is now to 156.25.
150.78 and 150 should offer support on the downside.
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 114.90. This now suggests that if the TLT can close above 114.45 today, it should test 115.63.
Minor support is in the 114.75 area. Minor resistance is around 115.43.
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 115.74. It closed just above the major 115.63 level. Watch to see if the GLD can hold this level today. If it can't, look for it to drop.
The GLD would need two closes under 114.85 to drop to 112.50.
The GLD is trading around the midband on the 60 minute chart. That level is 115.55. Watch to see if this level holds as support. A break under it and it becomes 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 66.23. It will need two closes above 66.41 to move higher.
65.63 is now minor support. 67.97 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 84.27. On the upside, minor resistance is at 84.57.
And the 84 area should offer support on the downside.
The FXY is oversold, but I would not expect a bounce to exceed 85.16.
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
AAPL closed down 1.39 yesterday. A retest of 175 would be likely.
175 should offer support on a pullback. Intra day charts remain bearish, so this would also suggest we may see another move down before firming up.
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.
