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
Total Premium Collected $1.95
ASNA Long at $14.20
Total Premium Collected $0.75
DUST Long $4.50
Total Premium Collected $0.70
SNAP Long at $14.54
Total Premium Collected - $1.65
OI Long Feb $19 call @ $1.70
MDR Long @ $9.31
PHM Long Dec $25.50 put @ $0.80
PHM Short Dec $24.00 put @ ($0.35)
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Yesterday, the S & P 500 once again gapped higher. The bullish gap was 16.12 which was almost identical to the bullish gap of 16.93 on Tuesday.
The difference between the two gaps was that Tuesday's gap was above Monday's high. And yesterday's gap, which was above Tuesday's close, was not above the prior high.
I know it may sound rather trivial, but I think the gap above the prior high is a better opportunity to short when the trends are bearish. Not that you could not have shorted yesterday, but the short on Tuesday was a better trade.
After the bullish gap yesterday, the market ran up to a high of 2,685.44 at around 1:00 EST. From that point, the market dropped the remainder of the day to close at 2,651.07
The low for the day was actually made at the close.
This move was about 3.50 point on the SPY. Enough to make some money day trading.
The range for yesterday ended up at 35.18 points. And the close percentage was only 2%.
This is not the type of price action you want to see to signal an end to a pullback.
You want to see a day which is at least the average true range which now reads 51.73 points. And yesterday's range was less than 70% of the average.
And you want to see a high close percentage. At least a close percentage above 60%.
Yesterday, the close percentage was only 2% which suggests that the odds of yesterday's low of 2,650.26 being violated before the high of 2,685.44 is almost 100%.
The support yesterday from yesterday's daily price bar is around 2,654. And 2,668 should be a resistance level to watch.
The bullish case from yesterday was that it was the second close above 2,634.30. Two closes under 2,634.30 would suggest a drop to 2,597.70.
At this point, 2,634.30 should be support until it is violated.
On the upside, the S & P 500 did hit the minor 2,658.70 level. It actually stalled yesterday at the next minor level, which is 2,683.10.
But, the market could not close above 2,658.70. The market will need two closes above 2,658.70 to move higher.
Pre open, the S & P 500 is trading about 6.50 points higher.
I am biased for a violation of yesterday's low before the market can move higher.
ADBE did report last night and is up slightly off their earnings.
Continue to monitor the levels as I mentioned above.
Here are the Key Levels for the Markets:
$VIX:
Major level: 31.25
Minor level: 29.69
Minor level: 26.56
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
The VIX closed at 21.53. It closed down 0.23 on the day. This was the second consecutive day where the VIX and the S & P 500 diverged.
Usually this signals a change in short term direction.
20.31 is a short term support level. Watch to see if the VIX can hold this level. If it can't, the VIX should continue lower. And yesterday's low was 20.50, so this short term level should still be support until it is violated.
If 20.31 does not hold, I would expect a drop to 18.75.
SPX:
Minor level: 2,805.20
Major level: 2,793.00
Minor level: 2,780.78
Minor level: 2,756.33
Major level: 2,744.10
Minor level: 2,731.90
Minor level: 2,707.50
Major level: 2,695.30
Minor level: 2,683.10
Minor level: 2,658.70 **
Major level: 2,646.50 <
Minor level: 2,634.30 ***
Minor level: 2,609.90
Major level: 2,597.70
To move higher, the S & P 500 will need two closes above 2,658.70. This level is resistance until it is violated. Based on the pre open trading, the market should open right around this level. Watch to see if it can hold as support.
Short term support is at 2,651.40. If this can hold, I am looking for a move up to 2,700.
Short term charts remain bearish, so long trades should be considered counter trend.
QQQ:
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
Major level: 168.75
Minor level: 167.19
Minor level: 164.06 **
Major level: 162.50 <
Minor level: 160.94 **
Minor level: 157.81
Major level: 156.25
The QQQ closed at 165.05. It closed up 1.44. If the QQQ can close above 164.06 today, it should test 168.75.
162.50 should be support for the QQQ.
And watch to see if the QQQ can clear 165.63. It will need to clear this level to head higher.
IWM:
Minor level: 151.56
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
Major level: 143.75 < <
Minor level: 142.19
Minor level: 139.06
Major level: 137.50
Minor level: 135.94
Minor level: 132.81
Major level: 131.25
The IWM closed at 144.82. It closed up 1.37 on the day.
Higher levels should be resistance. But, to move higher, the IWM will need two closes above 145.31.
The IWM is in a downtrend on its daily chart, so consider any rally a bounce in a bear market.
Short term, the IWM is oversold. Support should be at 143.75.
TLT:
Major level: 121.88
Minor level: 121.49
Minor level: 120.70
Major level: 120.31
Minor level: 119.92
Minor level: 119.14
Major level: 118.75
Minor level: 118.36 **
Minor level: 117.58
Major level: 117.19
Minor level: 116.80
Minor level: 116.02
The TLT closed at 118.35. This was the first close under 118.36. So, if the TLT can close under 118.36 today, it would suggest a drop to 117.19.
But, the TLT is just above the midband on the daily chart which is 117.74. This should be support until it is violated.
Short term charts remain bullish, so buying against support is the best option at this time.
GLD:
Major level: 121.88
Minor level: 121.10
Minor level: 119.53 **
Major level: 118.75 <
Minor level: 117.97
Minor level: 116.41
Major level: 115.63
Minor level: 114.85
Minor level: 113.28
Major level: 112.50
The GLD closed at 117.79. The GLD will need to clear 118.75 to head higher.
A failure at 118.75 would suggest the GLD should drop.
117.97 is a minor resistance level. Watch to see if the GLD can clear this level as well. If it can, it should test 118.75. If it can't, I would expect a drop to 115.63.
XLE:
Minor level: 72.66
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
Major level: 68.75
Minor level: 67.97
Minor level: 66.41 **
Major level: 65.63 <
Minor level: 64.85
Minor level: 63.28 **
Major level: 62.50
The XLE closed at 63.34. Yesterday was the first close above 63.28. This now implies if the XLE can close above 63.28 today, it should move up to 65.63.
Watch for consolidation around 62.50. If it does, I would expect a short term bounce.
Hopefully, we get a nice rally that we can short. I expect lower lows.
FXY:
Major level: 85.94
Minor level: 85.75
Minor level: 85.36
Major level: 85.16
Minor level: 84.97
Minor level: 84.58
Major level: 84.38 <
Minor level: 84.18
Minor level: 83.79 **
Major level: 83.59
The FXY closed at 84.41. This was the first close above 83.79, so if the FXY can close above it today, it should move up to 84.38.
Two closes under 83.98 would confirm a move down to 82.
84.18 should be minor support.
The FXY is oversold and I do expect a bounce.
AAPL:
Minor level: 182.81
Major level: 181.25
Minor level: 179.69
Minor level: 176.56
Major level: 175.00
Minor level: 173.44
Minor level: 170.31 **
Major level: 168.75 <
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Apple closed at 169.10 yesterday. To move higher, Apple will need two closes above 170.31.
The key level is 162.50. Is Apple breaks under 162.50, expect Apple to head lower.
Support should be at 168.75.
Waiting for a bit more price confirmation before suggesting a long on Apple.
WATCH LIST:
Bullish Stocks: REGN, AMT, WDAY, RH, CCI, DLR, RCI
Bearish Stocks: BA, LMT, NOC, FLT, GS, GD, RTN, ASML, NVDA, CXO, UTX, FANG, PLCE, PSX, ABC, CRI, EA, VLO
Be sure to check earnings release dates.
