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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Friday closed out the month of August with another bullish close. For the month, the S & P 500 closed 120 points to the upside. It closed out at 2,901.52.
This was a new high and within one and one half points of the next upside confirming level, which is 2,902.83.
This puts the S & P 500 about 230 points above the extreme upper band on the monthly chart.
That price level is 2,672.29. We know that this indicates that the market is extremely overbought, but we have to respect the fact that the momentum is still to the upside.
Based on the bullish price bar for August, support should be in the 2,856 to 2,861 area.
The market could pullback about 50 points and it would not alter the bull market.
For the week, the S & P 500 closed 26.83 points to the upside.
Support from last week's weekly price bar is in the 2,900 to 2,893 area.
The range for the week was only 31.81 points, as compared to the weekly average true range, which is now 54.16 points.
Even though we have had three consecutive higher closes, we have had two straight weeks where the range was less than the average true range.
Last week also saw a divergence between the VIX and the market. Both the
S & P 500 and the VIX closed to the upside. This can warn us to a possible pullback.
Actually, a pullback would be a great opportunity to get long.
With both the 30 minute and 60 minute charts in firm uptrends, I would expect a rally if the market does pullback.
At this point, watch to see if the S & P 500 can clear the minor 2,902.83 level. If it can't profit taking could set in.
Of course, this week is a shortened week, with the holiday yesterday.
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 popped up and hit a high of 14.03, before dropping in the last one and one half hours of the trading session, to close at 12.86.
You most certainly recognize that we were looking for resistance at the 14.06 level.
Also, for the VIX to move up to 18.75, it will need two closes above 14.06.
13.28 is a minor resistance level and 12.50 should be support.
A break under 12.50 and the VIX should head lower.
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
2,890.60 should be a support level. And to move higher, the S & P 500 needs two closes above 2,902.83.
Minor support is also at 2,894.30 and 2,888.20.
Short term intra day 30 and 60 minute charts are still bullish. Technical support is at 2,862.
QQQ:
Major level: 193.75
Minor level: 192.19
Minor level: 189.06 **
Major level: 187.50 Hit!
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 186.41. The next level on the upside for the QQQ is 189.06.
Two closes above 189.06 and the objective becomes 193.75.
Ultimately, I believe the QQQ goes to 200.
Minor support is at 185.16 and 185.94. 189.06 is minor resistance.
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 173.02. The move higher, the IWM would need two closes above 172.66.
At this point, support should be at 171.88 and 172.66. 174.22 could offer resistance.
TLT:
Major level: 123.44
Minor level: 123.05
Minor level: 122.27
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
The TLT closed at 121. The high for the day was 121.92 or just above the major 121.88 level. We were looking for resistance at 121.88 and it complied.
The TLT is still above the midband on the daily chart, which is 120.73. Watch to see if this level holds as support.
Also, both the short term 30 and 60 minute charts are bullish. I would not expect the TLT to drop under 120.31.
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
It closed at 113.51. Still biased for a test of 112.50. A break under 112.50 and the GLD should continue lower.
The GLD is heading back to test the lower band, which is now 111.76.
113.28 is a minor support. 114.06 is minor resistance.
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 74.44. The XLE will need two closes above 75.78 to move up to 78.13.
Minor support should now be at 73.44 and 74.22. And minor resistance is at 75.78.
The 30 minute chart has crossed into an uptrend. Short term momentum is shifting to the upside.
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 86.09. The FXY will still need two closes above 86.14 to move higher.
85.94 should offer support. And resistance is at 86.33.
Technical resistance is at 86.23, so it the FXY can clear this level, it should bounce.
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 227.63. 225 should offer support. Two closes above 228.13 and Apple should move up to 237.50.
Minor support is at 226.56.
Short term charts remain firmly bullish. Buy oversold conditions.
WATCH LIST:
Bullish Stocks: AMZN, ALGN, ILMN, DPZ, ADBE, BDX, DIA, COST, PANW, AAPL, MA, AET, AMGN, CME, WDAY, ADSK, CRM, GRUB
Bearish Stocks: TSLA, LRCX, EXP, SWKS, SPR, LRCX, CPA, RGLD, KHC, AN, HAL, NTRI, JD, OSTK, TECK,
Be sure to check earnings release dates.
