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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Yesterday, I posed the question as to how high this bounce could go and I mentioned a few areas of possible resistance.
The first area was around 2,880, which was the midpoint of the long range bar from Friday.
And the second area was around 2,892.
As it turned out, the S & P 500 gapped higher at the open and moved up to a high of 2,898.79 or about 7 points above the upper end of the resistance level before selling off.
After the sell-off, the market dropped to a low of 2,860.59 before rallying back slightly to close at 2,893.14.
The range for the day ended up being 38.20 points, which was almost the daily average true range, which is now 41.63.
And with a close at 22% of the daily bar, the odds favor the low being violated before the high.
We have now had two days that have traded within the body of the long range candle from Friday.
This still suggests that the midpoint of that candle should still be resistance. That price again is 2,880.
And the bias is still for a violation of the low of that candle.
And if the low of that long-range candle is violated, the market could drop to as low as 2,750. This would be significant because it would mean the market has violated the midband.
That would suggest that it becomes resistance.
The question now is what invalidates that idea that the low from Friday is violated?
Well, we have now had two days that have traded within the body of that candle.
If the S & P can continue to trade within the body of this candle for two more days, it would suggest that the low will not be violated.
But, resistance from yesterday's daily bar is in the 2,880 area, which just happens to be the resistance area from Friday's long-range candle.
Pre open, the S & P 500 is trading about 8 points lower.
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 20.15 yesterday. At this point, 21.10 should be resistance. And I would expect a test of 18.75.
Watch the 18.75 level because if it is violated, the VIX should continue lower.
Minor support is at 17.19 and minor resistance is at 20.31.
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
The S & P 500 closed at 2,869.15 yesterday. This is within one point of the major 2,968 level. A break under this level and the S & P should head lower.
2,856 should be minor support. And watch the minor 2,880.90 level. A close under 2,880 would suggest a drop to 2,807.
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 184.43. Watch for minor support at 182.81.
185.94 should offer minor resistance. A close under this level and the QQQ should test 181.
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 144.85. The IWM should continue lower.
A close today under 146.88 and the IWM should continue to 140.
Minor support should be at 143.75.
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 147.61. The TLT continues to move up to the 150 level.
146.88 should offer support. If the TLT can clear 147.66, it should continue up.
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 145.57. A close today above 145.31 and the GLD should head up to 150.
Like the TLT, the GLD continues to trade above the upper band.
143.75 should still be support.
XLE:
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
Minor level: 55.86 **
Minor level: 55.08
Major level: 54.69
The XLE closed at 55.85. If the XLE can close under 55.86 today, it should head down 54.69.
55.86 is the key level in the short term. To move higher, the XLE will need to reclaim it.
The XLE is still seriously oversold.
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 204.16. A close today and Apple should test 200. And it should offer strong support.
200 should be strong support for Apple. A break under 200 and Apple should head lower.
WATCH LIST:
Bullish Stocks: SHOP, LMT, AMT, NEE, HSY, CCI, KLAC, MDT, WING, SHAK, EA, WEC, MRK, INXN
Bearish Stocks: NFLX, REGN, DOZ, TSLA, CLX, MMM, JAZZ, JNJ, FFIV, PSX, PKI, ALC, SQ
Be sure to check earnings release dates.
