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.
CURRENT POSITIONS:
GOGO Long at $19.93
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XLNX Long September 20th - $110 call for $4.80
XLNX Short September 20th - $115 call for $2.70
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The market pulled back yesterday. Monday closed out at 2,997.96. It closed lower 9.43 points.
The intra day range contracted even more yesterday. The range for the day was only 11.52 points.
This was less than Friday's range of 14.43 points and about one third of the daily average true range, which is now 31.85 points.
These contractions certainly put us on alert that an expansion is forthcoming.
The question is to which direction.
With tensions growing in the middle east, we could be one tweet away from a selloff.
But, the trend is still bullish and we still have an objective for the S & P 500 higher than where we closed out yesterday.
Even though the market sold off yesterday, the down to up volume actually decreased for the day.
Typically, the down to up volume would follow the close relationship. So, this is a divergence. And with the short term trends still bullish, a reversal could happen this morning.
The support area from yesterday's daily price bar is in the 2,996 to 2,997 area.
The support area from last week's bar is in the 2,989 to 2,998 area. This should still be a valid area.
The major news yesterday was the spike in the oil market after the drone attacks.
The spot price spiked up 14.68%. And the XLE jumped 3.36%.
The question is will this move continue?
The jump in the XLE stopped exactly at the midband on the daily chart. The midband is 63.67 and the high yesterday was 63.65. Interesting how the bollinger bands know nothing about drone attacks, but once again the midband became the objective when price was trading below it.
As you know, the price will need to clear this level to move higher.
The spot price did clear its midband on its daily chart. The midband for light crude is 58.35 and it closed at 62.90. And it is much closer to crossing into an uptrend than the XLE.
If the the spot market can cross into an uptrend, I would expect the XLE to follow suit.
I will continue to monitor this price action.
Pre open, the S & P 500 is trading about 6 points lower.
ADBE and FDX report this afternoon after the close.
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 14.69 yesterday. The VIX should drop to 12.50.
And the minor 14.85 level should still act as resistance. If the VIX does take out 14.85, I don't think it would take out 15.63.
Look for support at 14.06.
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
Minor support is right at 2,991.90, which is right at the technical support level. Watch this level today. A break under it and it would be resistance.
Short term trends remain bullish. Look for technical support around 2,992.
And support should be at 2,986.
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 191.68. A close today under 192.19 and the QQQ should test 187.50.
Watch this level today.
Technical support should be around 188, which is close to the 187.50 level.
191.41 should be a short term support level. And 190.63 should offer support as well.
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 157.90. A close today above 157.91 and the IWM should test 162.50.
159.38 is a minor resistance level. If the IWM clears this level, look for a move higher.
156.25 should be support. And technical support should be at 155.
TLT:
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
Minor level: 132.81
Major level: 131.25
The TLT closed at 138.28. It closed right on the minor 138.28 level.
137.50 should be support. And if the TLT can clear 138.28, it should move up to 141.
Technical resistance 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 141.32. The GLD will need two closes above 141.41 and it should head up to 143.75.
137.50 should be support. I would expect the TLT to fail after a bounce.
XLE:
Major level: 65.63
Minor level: 64.85
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
The XLE closed at 63.13. The XLE did take out the 62.50 objective. The next level on the upside is 63.28.
Two closes above 63.28 and the XLE should test 65.63.
With all short term trends bullish, look to buy at support. Technical support is around 61.
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 219.90. At this point, the major 212.50 level should offer strong support.
215.63 should be a short term support level.
218 is technical support.
WATCH LIST:
Bullish Stocks: LMT, GOOGL, MLM, ASML, LRCX, HD, AAPL, BABA, RH, DE, CMI, ITW, UTX, ZBH
Bearish Stocks: REGN, HUM, SQ, GDOT
Be sure to check earnings release dates.