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 S & P 500 closed modestly lower yesterday. It ended the day closing 0.28 points lower. It closed out at 2,978.43.
I mentioned with the narrow range doji from Friday that with a gap higher open, the close from Friday should be support.
And after opening above Friday's high, the market sold off to under the prior close, only to come back to test it.
This early week softness does not surprise me after a strong bullish week.
And yesterday, the market took out Friday's high which we expected based on the fact that last week, the S & P closed at 92% of the weekly bar.
So, the minimum expectation has already been met.
Quite frankly, I would have preferred that last week's high not be violated and the market pullback into the body of last week's price bar.
This sets up a strong price expectation that the price should take out the prior week's high.
But, short term momentum is still bullish, so buying against support is still the viable alternative.
Especially if the 60 minute chart can cross into an uptrend. And as I have been saying, it is very close to doing that.
Quite frankly, I would not be surprised if it did that today.
Remember, these are long term moving averages, so when they cross each other, it is usually a very strong signal that price should continue in that direction.
For example, on John's webinar last week, he asked me about the IWM. I said that it should most likely continue higher.
Why?
Simply because the 200 ema crossed above the 253 day average.
In fact, the 200 ema for the IWM is now 152.13. And the 253 day average is 151.84.
This is the first bullish crossover for the IWM since the bearish cross in November of last year.
As a comparison, the S & P crossed to the upside in May of this year. So, you can clearly see that the IWM has been the laggard.
Yesterday's high for the IWM was 152.24 and it closed at 151.91. So, you can see that it is just above the midband.
The IWM will need to clear the midband and move away from it to continue higher.
These long term averages can be really powerful.
Pre open, the S & P 500 is trading about 4 points lower.
Support from yesterday's daily price bar is in the 2,979 to 2,983 area.
The support area from last week's weekly bar, which is in the 2,939 to 2,944 area, should still be valid.
Tomorrow is our regularly scheduled webinar. If you would like me to review any charts, please email at davismdt@gmail.com and I will be happy to try and add the charts to the webinar.
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 15.32 yesterday. This was a move up of 0.32.
The VIX did manage to move above the major 15.63 level, but could not close above it.
The next level lower is 14.85. Two closes under this level and the VIX should be back to testing the major 12.50 level.
14.06 is a minor support level. If the VIX breaks under it, it should head lower. 16.41 should continue to be minor resistance.
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 500 closed at 2,978.43. This was just 7 cents under the minor 2,978.50 level. At this point, 2,968.80 and 2,978.50 should still offer support.
3,007.85 should be the next level to watch on the upside. Two closes above this level and the S & P should move up to 3,125.
2,954 should also offer support. And the 2,950 area should offer technical support.
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 191.19. The objective should still be to 193.75. But, the QQQ needs to reclaim 192.19 level, or the QQQ could test 187.50.
189.06 should be minor support. And 189 should offer technical support.
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 151.91. With a close above 151.56, if the IWM can close above it again, it should test 156.25.
It will need to close above 151.56 to head higher.
150 should now offer strong support.
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
The TLT closed at 143.20. With a close under 143.75, it should now be resistance.
Two closes under 142.97 and the TLT should test 140.63.
142.19 is a minor support level on the downside. If the TLT breaks under it, expect it to continue lower.
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 141.39. The GLD continues to drop from the upper band on the daily chart. That level is now 145.68.
The objective for the GLD should drop to 140.
139.06 is minor support. And 137.50 should be strong support.
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 60.21. A close above 60.16 and the XLE should test 62.50.
60.94 is a minor resistance level and if the XLE can clear it, expect it to head higher.
59.38 should offer support on the downside.
The short term 30 minute chart has turned bullish, indicating momentum is shifting to the upside. And the 60 minute chart is close to crossing into an uptrend.
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 214.17. The next level on the upside is 215.63. Two closes above 215.63 and Apple should test 225.
212.50 should offer minor support.
With both the 30 & 60 Minute charts in uptrends, continue to buy oversold conditions.
WATCH LIST:
Bullish Stocks: LMT, COST, FLT, MA, NTES, BDX, MLM, HD, LRCX, CME, AAPL, BABA, GPN, CB, KLAC, VMC, DLR
Bearish Stocks: HUM, NFLX, JAZZ, ALXN, FANG, CNC, MDP, YELP, ALKS
Be sure to check earnings release dates.
