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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After the bounce on Tuesday, the market gave back all those gains plus more.
For the day, the S & P 500 was down 85.72 points. Because of the massive 32.17 bearish gap open, the intra day range was only 54.51 points.
The last time the S & P 500 closed over 80 points to the downside was on October 15, 2018 when the market closed 94.66 points to the downside. On that day, the down to up volume was 10.79, similar to yesterday.
Yesterday's down to up volume registered 9.72, signalling another selling climax.
The selling continued after the October sell off last year. As you know, the market did not finally bottom until December 24, 2018.
But in this sell off, the market has already had three selling climaxes, which suggests that the selling maybe close to coming to an end.
In addition, the daily chart is in an uptrend. And the market is still trading above the midband on the daily chart, which should be a level of support.
That price level is 2,809. And a key support level to watch at this point.
Yesterday's close of 2,840.60 put the market within 31 points of the midband.
The key for the short term will be the lower bands on the 30 and 60 minute charts.
As you know, on the first selling wave back on August 6th and 7th, the S & P 500 took out the lower band on the 60 minute chart.
This tells us that there is a very high probability that the lower band will be retested after a rally.
And we are getting that test now. The question will be if the price can hold above the lower band on the 60 minute chart. That price level is 2,833.60.
We know one of two things will happen. Either the price holds above the lower band or it breaks under it again.
In the event it breaks under it, we would most certainly expect another sell off after a bounce.
With a bearish close at 2% of the daily bar, we expect the low to be violated before the high. And with a long range bearish candle, we certainly expect resistance at around 2,867, which is the midpoint of the bearish bar.
The major question at this point is this the end of the bull market?
At this point, I believe it is too early to tell because there is strong support below the market. If it can't hold, that would suggest further selling.
Pre open, the S & P 500 about 13 points higher.
Here are the Key Levels for the Markets:
$VIX:
Major level: 28.13
Minor level: 27.35
Minor level: 25.78
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
The VIX closed yesterday at 22.10. It closed to the upside 4.58. It was a just of 26.14%.
At this point, 18.75 should be support. And watch the 21.88 level. If the VIX clears 21.88 it should head higher.
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
2,851.58 is the key level to watch in the short term. Two closes under the 2,851.58 level and the S & P 500 should drop to around the 2,705 level.
And 2,900 should be resistance on the upside.
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 182.76. Biased at this point, for a test of 181.25.
Just like the S & P, the QQQ is retesting the lower band on the 60 minute chart, which is 179.84. Watch to see if it can hold.
And the major 187.50 level should also act as support.
182.81 is a minro supprot level.
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 146.07. A close today under 148.44 implies a drop to 143.75.
The IWM has already dropped under the lower band on its 60 minute chart, which implies a further downleg after a bounce.
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 145.69. This now suggests that if the TLT closes above 145.31 today, it should run up to 150.
The yield curve has inverted, which suggests that we are heading towards a recession.
But, the TLT is seriously overbought and I do believe we will see a pullback.
GLD:
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
Major level: 134.48
Minor level: 133.60
Minor level: 132.03
The GLD closed at 142.75. Watch to see if the GLD can clear 143.75. And yesterdays high was exactly 143.75.
If the GLD cannot move above 143.75, look for a pullback.
Like the TLT, the GLD continues to trade above the upper band on the daily chart. The upper band is 139.92.
140.63 is minor support.
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 56.63. The XLE has now dropped down to oversold territory, closing just above the major 56.25 level.
I don't see the XLE dropping under 53.13, but if it does, it should head lower.
57.81 is minor resistance. And 54.69 is minor support.
AAPL:
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
Minor level: 178.13
Major level: 175.00
Apple closed at 202.75. And yesterday it formed an inside day.
So, expect a large move after breaking out of this formation.
If Apple can hold 203.13, it should head higher.
WATCH LIST:
Bullish Stocks: GOOGL, CNG, NOC, SHOP, IAC, MLM, MCD, RTN, VRSK, UHS, CB, ZBH, FIS, ROKU, CBOE, RS, SBUX
Bearish Stocks: ALGN, MMM, NVDA, FFIV, CAT, BIDU, FTV, VLO, GRUB, SQ, WUBA, CNC, NTAP, MO, XEC, CLB
Be sure to check earnings release dates.
