August 21, 2015 - MDT Pro Tips A.M.

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.

Current Positions

GOGO? Long at $19.93
Premium collected - $1.25

NCR Long Jan 15 $27 Call
NCR Short Jan 15 $32 Call
Net Debit - $1.70

NFLX Long Aug 21 -$125 Call
NFLX Long Aug 21 - $127 Call

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Yesterday's sell off turned just plain ugly.? And I am hearing a lot of discussion now that a bear market is in the making.

The one thing I do know is that once again that 12.50 level on the VIX proved to be? major support.

The VIX rallied up and closed above the 18.75 level yesterday, closing at 19.01.

The S & P 500 had it's worst day in almost two years.

I don't believe the selling is over as yesterday did not qualify as a selling climax.? Also, by closing under 2,046.90, it means that with another close under that level today, the objective is to the 2,000 to 2,015 level.

A quick comment about the VIX is warranted.? As I have said on various webinars, the VIX can help us to determine turning points.? The thing is cannot predict is the extend of the ensuing move.? And this last sell off demonstrates what I mean.

We know that 12.50 has been a strong support level.? What? we don't know is far it will move or jump.?

The only position outstanding are the long calls that expire today on NFLX.? The trade was placed based on strong set ups on shorter term intra day charts.

As the overall market sold off, naturally this stock, and most stocks are going to be carried down with it.

This is why I suggested a 1% allocation in this trade.
In fact, if I suggest any long front week options, the risk will always be limited to 1%.

I love weeklies because of their leverage.? However, the negative is that you need to be perfect on entry, direction and price expansion.

This is how we were able to make almost 100% in a day on WDC.? But, as you can see, they do carry risk.

Because of the market sell off, I am contemplating writing? a special report on the current status of the market.

If you feel this would be helpful, send me an email and davismdt@gmail.com.? Is there is enough interest
I will write it.

Here are the key levels for the markets.

Stocks...
?
VIX:?

Major level- 23.44
Major level - 21.88
Major level - 20.31
Minor level - 19.14 *
Major level - 18.75
Minor level - 18.36
Major level - 17.19
Major level - 15.63
Minor level - 14.45
Major level - 14.06

The VIX would need two closes above 19.14 to confirm a move up to 20.31.

20.31 was the level the VIX was rejected at on the last rally.

S & P 500 Cash Index:?

Major level - 2,078.10
Major level - 2,062.50
Minor level - 2,074.20
Major level - 2,046.90
Minor level - 2,043.00
Minor level - 2,035.30
Major level - 2,031.30
Minor level - 2,027.40

A close under 2,046.90 today and the objective becomes the 2,000 to 2,015 area.

Nasd 100 (QQQ):?

Major level - 110.94
Minor level - 109.77
Major level - 109.38
Minor level - 108.99
Major level - 107.81
Minor level - 107.42
Major level - 106.25

A close today under 107.42 and the object is to 106.25.

TLT:?

Major level - 128.13
Minor level - 125.78
Major level - 125
Minor level - 124.22
Minor level - 122.66?
Major level - 121.88
Minor level - 119.53?
Major level - 118.75

The TLT closed yesterday at 126.02, just above the 125.78 level.? A close today above 125.78 and the objective is to 128.13.

Short term timeframes remain in uptrends.

Should be volatile today.

GLD:

Major level - 115.63
Major level - 112.50
Minor level - 110.16 *
Major level - 109.38
Minor level - 107.03
Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13

The GLD took out the 109.38 level yesterday and closed just above 110.16 at 110.44.

A close today above 110.16 and the objective
becomes 112.50.

XLE:
?
Minor level - 69.53 *
Major level - 68.75
Minor level - 67.96
Major level - 65.63
Minor level - 64.85
Major level - 62.50

The XLE is almost down to the 65.63.? If this level cannot hold, it should drop to 62.50.

The XLE should most likely start to settle in the 62 to 65 area.

Apple:

Apple should continue down to the 100 to 106 area.

Major levels for Apple are 118.75, 112.50, 106.25, and 100.

Watch list:
Bullish Stocks:? PCLN, LMT,? BWLD, ULTA, GD, STZ, VRTX, EXPE, BA, FLT, HON, ADBE, CLX, RAI

Bearish Stocks: FDX, BIDU, IBM, MMM, RL, DDS, UNP, ASML, DECK, XLE, FOSL,QCOM, SCTY

Be sure to check earnings release dates.