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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Yesterday saw some selling pressure in the markets. The S & P 500 closed 13.22 points lower.
It closed out the day at 2,938.79. The close was still about 10 points above the downside confirming line of 2,929.73. The S & P will need two closes under this level to continue lower.
I mentioned that the support area from Friday's daily bar was in the 2,935 to 2,936 area and as it turned out, the low for the day was 2,935.68, which was right in the middle of this area.
The support area from yesterday's daily price is now in the 2,941 to 2,948 area. And with a close percentage of 13%, we expect a violation of yesterday's low before the high.
It now seems likely that the market will retest the weekly support area from last week's weekly price bar. As a reminder, the first level of support is in the 2,924 area. And under that is the 2,904 area.
But, the minor 2,929.73 level should act as support until it is violated. Watch this level today.
From a technical standpoint, the key at the moment is the 30 minute chart timeframe.
As I mentioned a few days ago, the S & P had dropped under the lower band on this timeframe.
This happened on October 2nd and 3rd. Based on this event, it sets up two possible outcomes.
The first is that the market is oversold and a move higher typically happens. That we got the bounce for two days.
The second scenario is that a retest of the lower band usually occurs. The retest will tell us if the price will head lower or if a true bottom is in.
If the price drops back under the lower band, it usually means that the bottom is not in and to expect another retest.
The bottom on the retest will usually stop above the lower band. It can stop right at bottom band, but it does not have to.
The point of all this rhetoric is that I believe we are seeing the retest now.
Pre open, the S & P 500 is trading about 16 points lower. Assuming this trading holds into the open, the market should open around 2,923 or about 13 points below yesterday's low.
This would of course, satisfy the close percentage right at the open.
And the projected open would be about a point under the upper end of the weekly support area of 2,924. A break under this level would suggest it would now be resistance. And a run down to 2,904 is likely.
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 17.86 yesterday. A test of 18.75 is the most probable scenario.
The likely scenario for the S & P is a retest of the lower band on the 30 minute chart, the opposite is true for the VIX.
The VIX broke above the upper band and is now heading back up to test it. The upper band is 21. It should be resistance unless it is cleared.
17.19 should offer support. And minor support is also at 17.97.
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 2,938.79. The S & P should open under this level and it should be resistance. So, watch this level on a rally.
With a break under 2,929.73, the S & P should drop to 2,905. This level is support until it is violated.
2,884 is the lower band.
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 188.24. At this point, the QQQ is still holding above the 187.50 level. But, a break under it and it would become resistance.
189.06 is minor resistance. And 185.94 is minor support.
183 is the lower band on the 30 minute chart. And the midband is 189.
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 148.88. Like the S & P, the IWM should retest the lower band, which is 144.
A break under 148.44 and the IWM should continue lower. 150 should continue to offer 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 145.78. Watch for support at the minor 145.31 level.
144.53 should offer minor support. Short term charts remain bullish.
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 140.69. The objective should be to 143.75.
The major 140.63 level should be support.
Watch the technical support level at 141.50. If the GLD can clear this level, it should head higher.
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 56.87. A close today above 57.03 and the XLE should head up to 59.38.
The major 56.25 should offer support. And 57.03 should offer support as well.
AAPL:
Major level: 237.50
Minor level: 234.38
Minor level: 228.13
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
Apple closed at 227.06. Apple closed above the 225 level, which was the objective. 225 should still be support.
The 221 area should offer support.
Short term charts remain bullish.
WATCH LIST:
Bullish Stocks: AGN, EXPE, DLR, SPLK, EDU, WPC, PAYX, MTH, CMS, LEN, MDCO, TSM
Bearish Stocks: HUM, CLX, JAZZ, LLY, FANG, PLCE, BMRN, WUBA, KFY, AMTD, TDC, TLRY, ALKS
Be sure to check earnings release dates.
