While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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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The first quarter has certainly started with extreme volatility. For the week, the S & P 500 is trading 51.16 point lower through yesterday's close.
When you consider that the weekly range through yesterday was 136 points, trading 51 points to the downside puts the weekly price bar at 40% of the weekly range.
This means that the market rallied 54.70 points off the weekly low. But, we did expect a bounce yesterday because, as I mentioned, the S & P was trading under the lower band on its 30 minute chart.
But, this also sets up a very high probability that the market will retest the lower band.
I do want to mention that the weekly range so far is 169% of the weekly average true range.
This suggests to me that the range for the week is in. The S & P would have to sell off over 55 points today to take out the weekly low. With the ranges the market has seen this week, it is possible.
The weekly midpoint so far is 2,924. And yesterday's close was only 14 points below it.
Watch this level if the market does get a bounce today.
I do want to mention that the DOW stopped right at the midband on its daily chart. The midband is 25,728 and yesterday's low was 25,743.
So, the DOW has tested its midband.
I bring this up because I mentioned the other day that a test of the midband for the S & P 500 would not be out of the question.
The midband for the S & P 500 is 2,817 and yesterday's low was 2,856. This puts the market to within 39 points of the midband. Certainly a test of the midband is not out of the question.
Yesterday's daily bar closed 23 points higher. And the day had another long range candle. The daily range was 55.19. The range was just over 150% of the daily average true range.
The daily bar closed at 99% of the range, which does suggest the high will be violated.
The support area from yesterday's daily bar is in the 2,884 area.
The lower band on the 30 minute chart is 2,891. Watch this level on a selloff.
Pre open, the S & P is trading about 12 points lower. This would project to an open around 2,898, assuming this continued until the open.
This would be about 7 points above the lower band on the 30 minute chart. You want to see if it holds. If it can't, expect more selling.
Here are the Key Levels for the Markets:
$VIX:
Major level: 25.00
Minor level: 24.22
Minor level: 22.66
Major level: 21.88
Minor level: 21.10
Minor level: 19.53
Major level: 18.75 <<
Minor level: 17.97
Minor level: 16.41
Major level: 15.63
Minor level: 14.85
Minor level: 13.28
Major level: 12.50
The VIX closed at 19.11 yesterday. This put the close back under 19.53. So, the VIX will still need two closes above 19.53 to move higher.
20.31 should be minor resistance.
And the VIX dropped under the upper band on its 30 minute chart. The upper band is 20.65. Watch to see how the VIX reacts on a retest.
A bounce in the market will not happen until the VIX moves back inside the upper band. This is the key short term indicator to time the bounce.
18.75 should be support.
SPX:
Minor level: 3,164.08
Major level: 3,125.00
Minor level: 3,085.95
Minor level: 3,007.85
Major level: 2,968.80
Minor level: 2,929.73 **
Minor level: 2,851.58
Major level: 2,812.50
Minor level: 2,773.45
Minor level: 2,695.35
Major level: 2,656.30
The S & P closed at 2910.63. The 2,929.73 level should be resistance. A drop to 2,812 should be expected.
There is also a short term level at 2,880.90. Two closes under this level and the S & P should drop to 2,807. This level is still the key level on the downside. The S & P did drop under it, but managed to recoup it.
But, it is support until violated.
QQQ:
Major level: 196.88
Minor level: 196.10
Minor level: 194.53
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
The QQQ closed at 186.07. The QQQ managed to close above the 185.94 level. It will still need two closes under 185.94 for it to drop to 181.
185.94 is the key level in the short term. If the QQQ cannot reclaim it, look for it to drop.
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 147.74. The midband which is 150.39 should be resistance.
145.31 should offer support. And 148.44 is still resistance.
TLT:
Major level: 150.00
Minor level: 148.44
Minor level: 145.31 **
Major level: 143.75 <
Minor level: 142.97
Minor level: 141.41
Major level: 140.63
Minor level: 139.85
Minor level: 138.28
Major level: 137.50
Minor level: 135.84
The TLT closed at 144.92. The TLT managed to close above the 143.75 level.
143.75 should now be support. And the TLT can close above 145.31, it should head up.
Technical support is around 141.
GLD:
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
Minor level: 142.97
Minor level: 141.41 **
Major level: 140.63 <<
Minor level: 139.85
Minor level: 138.28
Major level: 137.50
Minor level: 136.72
Minor level: 135.16
The GLD closed at 141.90. A close today above 141.41 and the GLD should head higher.
The major 140.63 level should be support.
Watch the technical support level at 141.
XLE:
Minor level: 63.28
Major level: 62.50
Minor level: 61.72
Minor level: 60.16
Major level: 59.38
Minor level: 58.60
Minor level: 57.03
Major level: 56.25 <<
Minor level: 55.86
Minor level: 55.08
Major level: 54.69
The XLE closed at 57.02. The XLE will need two closes above 57.03 to move up to 59.
The major 56.25 should offer support. The XLE is oversold in the short term as well. The lower band on the 30 minute is 56.10.
AAPL:
Major level: 225.00 <
Minor level: 221.88
Minor level: 215.63 **
Major level: 212.50 <
Minor level: 209.38
Minor level: 203.13
Major level: 200.00
Minor level: 196.88
Minor level: 190.63
Major level: 187.50
Minor level: 184.38
Apple closed at 220.82. Watch the 221.88 level. If it can move above this level, it should be support.
215.63 should still be support. The 220 area should offer technical support.
WATCH LIST:
Bullish Stocks: MLM, AAPL, NSC, RH, RH, AGN, KLAC, ITW, IBM, UTX, KSU, PG, PSX, NXPI
Bearish Stocks: NFLX, REGN, HUM, UNH, VRTX, MOH, BMRN, GRUB, GDOT, ALKS
Be sure to check earnings release dates.
