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
Short Nov 10th - $15.50 call @ ($0.96)
AMC Long at $15.27
Premium Collected - $0.98
Short Nov $15 call @ (0.55)
THC Long at $14.63
Premium Collected - $1.65
Short Nov 10th - $14.50 call @ ($0.85)
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The S & P 500 continues to make new highs, closing at 2,591.13 yesterday, up 3.29 points for the day.
This brings the market to within 6 points of the next key upside level.
But yesterday, the VIX also closed to the upside, creating a divergence. the VIX closed at 9.40, just two cents above the major 9.38 level.
At this point, I still expect the higher resistance levels on the VIX to hold as resistance. Namely, both the 9.77 and 10.16 should still offer resistance.
And I would expect support for the S & P 500 at the minor 2,585.40 level. Also, support from last week's weekly price bar is in the 2,577 to 2,582 area.
Admittedly, it becomes increasingly more risky to go long as this market continues to trade at extreme levels.
This is where the VIX levels and the S & P 500 levels help to guage whether the move should continue or not.
As long as upside levels are getting hit, the market should continue higher.
And then we can also focus on sectors than have become oversold and out of favor. A recent example of this is oil. I have continually detailed what action would indicate that a bottom is in place and where the upmove could falter.
One example of this is the mid band on the monthly chart for the WTIC. I have pointed this level out on virtually every webinar this year and mentioned that I felt it would be retested. The question is would price be repelled at that level or would it break through?
The aforementioned midband is 55.71 and yesterday, the WTIC closed at 57.35, clearing that level.
However, the WTIC is close to the upper band on its daily chart, which uis 57.59. We know if it breaks through this level, it will indicate excess strength. But a pullback would not be out of the question.
In fact, a pulback would create a great buying opportunity, assuming that WTIC holds above 55.71 on its monthly chart.
On another note, both AMC and THC reported last night. This is why I suggested holding short calls going into earnings.
I do believe both stocks are close to a bottom, but I also like to take advantage of high implied volatility (IV) going into earnings.
Also, by selling calls going into earnings, it offers some downside protection.
SNAP reports this afternoon and we collected option premium that carried an IV over 120%.
Based on how these stocks trade after earnings, I will continue to make adjustemnts.
Continue to follow the resistance levels.
Here are the Key Levels for the Markets:
$VIX:
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 <
With the VIX closing just above the 9.38 level, a bounce up to 10.55 would not be out of the question. To move up to 10.94, the VIX would need two closes above 10.16.
To move lower, the VIX needs to close two days under 8.99.
Minor support is at 8.59.
$SPX:
Minor level: 2,675.83
Major level: 2,656.30
Minor level: 2,636.75
Minor level: 2,597.65 <
Major level: 2,578.10 **
Minor level: 2,558.58
Minor level: 2,519.53
Major level: 2,500.00
Minor level: 2,484.3
2,585.40 and 2,586.70 is minor support and 2,595.80 is minor resistance.
The minor 2,583.60 level could also offer support.
Short term momentum still remains bullish.
QQQ:
Major level: 156.25
Minor level: 155.47
Minor level: 153.91 **
Major level: 153.13 < Hit
Minor level: 152.35
Minor level: 150.78
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
The QQQ closed at 153.97, closing above the next upside confirming line. A close today above 153.91 and the QQQ should move up to 156.25.
153.13 should now be support.
IWM:
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
Major level: 143.75
Minor level: 142.97
The IWM closed at 148.78. 148.44 continues to offer minor support.
If the IWM holds above 147.66, I would expect a retest of 150.
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
Minor level: 122.27
Major level: 121.88
With the TLT closing at 126.11, it now sets up a scenario where if the TLT can close above 125.78 today, it should move up to 128.13.
125.78 should now be support.
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 121.65. At this point, 121.88 should be resistance.
Minor resistance is at 122.27. And minor support is at 121.09.
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
The XLE closed at 70.25, within 6 cents of the 70.31 level. Not only did the XLE break through 68.75, it almost hit 70.31.
71.88 is the next upside level.
69.53 should now be support. And 71.09 is minor resistance.
FXY:
Major level: 89.06
Minor level: 88.67
Minor level: 87.89
Major level: 87.50
Minor level: 87.11
Minor level: 86.33
Major level: 85.94 <
Minor level: 85.55 ***
Minor level: 84.77
Major level: 84.38 <
The FXY closed at 84.39, just one cent above the major 84.38 level.
Low risk long entry with a stop just under the 84.38 level.
AAPL:
Major levels for Apple are 175, 171.88, 165.63, 162.50, 159.38, and 156.25.
Yesterdsay's high was within one cent of the 175 target we have discussed. I do believe Apple will pullback because this move has been too fast.
Should this happen, it will set up a great buying opportunity.
WATCH LIST:
Bullish Stocks: AMZN, GOOGL, AVGO, ALGN, BDX, STZ, NVDA, FLT, AAPL, OLED, MA, CME, DE, ALNY, SWKS, WDAY, MSFT
Bearish Stocks: TSRO, EXP, GPC, AAP, ABC, SRCL, ALK, SLB, PZZA, ALKS
Be sure to check earnings release dates.
