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.
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The S & P 500 gapped up yesterday and proceeded to move up all day. The market opened at 2,890.74 and ran to a high of 2,911.17, before settling at 2,904.31.
The range for the day was 20.74 points, which exceeded the daily average true range, which now reads 18.94.
Yesterday's price action is the perfect example of why I don't advocate trying to short the market when you still have bullish short term charts.
In fact, I will hazard a guess and say that a lot of the upmove was created by the shorts covering their losing positions.
Yesterday was also a day where our resistance levels were impacted by the market.
The open at 2,890.74, was 14 cents above the major level of 2,890.60, which we identified in yesterday's update as a possible support level.
And after running up to 2,911.17, the S & P 500 sold off to close at 2,904.31, which is 1.48 points above the 2,902.83 confirming level.
A close today above 2,902.83 would suggest the S & P 500 will continue to move up to 2,939.50.
Another fact about yesterday is this. With the low for the day at 2,890.43, it came about half way in the weekly support level I mentioned that past two days.
That level is the 2,887 to 2,893 area form last week's weekly price bar.
Having said that, it is likely that the low for the week is in.
But, with a high of 2,911.17 yesterday, last week's high was exceeded by about three points.
Therefore, the 92% odds created from the high close percentage from last week's weekly bar has been satisfied. By the way, this rough estimate only applies to the high being violated before the low. It does not necessarily mean that this week should close above last week's high.
This is an important point and one to ponder. Because if you think about it, the best set up is when you have a high close percentage and the prior high is not violated and the market is trading within the body of the bar.
It may sound confusing, but I assure it isn't.
For yesterday, the daily price bar closed at 67% of the daily bar. Therefore, the odds of violating yesterday's high before the low is about 67%.
Pre open, the S & P 500 is trading about 4.50 points lower.
Support from yesterday's daily price bar is in the 2,897 to 2,901 area.
Watch to see if the market holds support in this area on a pullback.
Here are the Key Levels for the Markets:
$VIX:
Major level: 25.00
Minor level: 23.44
Minor level: 20.31
Major level: 18.75 <
Minor level: 17.19
Minor level: 14.06 **
Major level: 12.50 <
Minor level: 10.94
Minor level: 7.81
Major level: 6.25
The VIX closed at 12.79. Yesterday's high was 13.48 or about 50 cents under the 14.06 resistance level.
14.06 is still resistance. On the downside, the key level is 11.72.
Watch if the VIX can break under 12.50.
SPX:
Major level: 2,939.50 <<
Minor level: 2,927.28
Minor level: 2,902.83 **
Major level: 2,890.60 <
Minor level: 2,878.40
Minor level: 2,854.00
Major level: 2,841.80
Minor level: 2,829.60
Minor level: 2,805.20
Major level: 2,793.00
A close today above 2,902.83 would further confirm a move up to 2,939.50.
Minor support is at 2,896.70 and 2,890.60. On the upside, 2,921.10 could offer resistance.
Short term intra day 30 and 60 minute charts are still bullish. Technical support is now around 2,885. This level should offer support.
QQQ:
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
Minor level: 176.56
Major level: 175.00
The QQQ closed at 182.84. The objective should be up to187.50.
Minor support is now at 181.64 and 182.03.
The short term 30 minute chart has crossed into a downtrend, so momentum has shifted lower.
IWM:
Major level: 175.00
Minor level:174.22
Minor level: 172.66
Major level: 171.88
Minor level: 171.10 **
Minor level: 169.53
Major level: 168.75 <
Minor level: 167.97
Minor level: 166.41
Major level: 165.63
The IWM closed at 170.27. Biased for a test 168.75.
Watch 170.31. If the IWM cannot clear 170.31, I would expect a drop.
TLT:
Major level: 121.88
Minor level: 121.10
Minor level: 119.53
Major level: 118.75
Minor level: 118.36 **
Minor level: 117.58
Major level: 117.19
Minor level: 116.80
Minor level: 116.02
Major level: 115.63
The TLT closed at 117.31. The TLT is clearly in oversold territory.
The key will be the 115.63 level. If the TLT breaks under this level, it should head lower.
117.97 is a short term support resistance.
GLD:
Major level: 117.19
Minor level: 116.80
Minor level: 116.02
Major level: 115.63
Minor level: 114.85
Minor level: 113.28 **
Major level: 112.50 <
Minor level: 111.72
Minor level: 110.16
Major level: 109.38
The GLD closed at 113.44. Watch the 113.28 level. If this cannot hold as support, I would expect a further drop. Most likely a drop to 112.50.
114.06 should be minor resistance.
The gold miner index (GDX) still remains under the lower band on the daily chart. Wait for a close back inside the bands before nibbling on the long side.
The GDX closed exactly on the lower band yesterday, which is 18.43.
XLE:
Major level: 78.13
Minor level: 77.35
Minor level: 75.78
Major level: 75.00
Minor level: 74.22 **
Minor level: 72.66
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
Major level: 68.75
The XLE closed at 74.87. Yesterday's high came in 75.38, 38 cents above the 75 level.
74.61 should offer minor support. If the XLE can clear 75, I would expect it to continue higher.
Short term momentum is shifting to the upside. But, technical resistance is at 74.60, which the XLE took out yesterday. This level should now be support.
FXY:
Major level: 86.72
Minor level: 86.53
Minor level: 86.14
Major level: 85.94
Minor level: 85.75 **
Minor level: 85.36
Major level: 85.16 <
Minor level: 84.97
The FXY closed at 85.10. The FXY closed under the major 85.16 level.
84.77 should offer short term support. A break under this level and expect the FXY to head lower.
Short term charts remain bearish.
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
Apple closed at 218.24. Short term support should be at 215.63. A break under 215.63 and Apple should head lower.
The 30 minute chart has crossed into a downtrend, so I am biased for more selling pressure.
WATCH LIST:
Bullish Stocks: AMZN, ALGN, NFLX, HUM, NVDA, ADBE, BA, PANW, QQQ, AET, HON, CRM, UNP, GRUB, ADSK, CHKP
Bearish Stocks: GS, MLM, LRCX, BLUE, CRI,WLK, CELG, FSLR, TRP, BIG, CLVS, ACM, X, HUN, CARS
Be sure to check earnings release dates.