December 18, 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
Total Premium collected - $1.25
Short December $20 Call - $.30

NCR Long Jan 16 $27 Call
Net Debit - $.80

X Long at $14
Total Premium collected - $.89

ASNA Long at $14.20
Total Premium collected - $.75

LUK Long December $18 Call - $.35

ETE Long $14.05
Short December $15 call - $.30

VNR Long $2.97
Short December $3 Call - $.30

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The markets gave back all the gains from Wednesday after the Fed announced the rate hike.? Actually, they gave back a bit more.

The S & P was up 29.66 on Wednesday and yesterday, it closed down 31.18.

The extreme volatility continues.? And today, I would expect more of the same with triple witching.

Triple witching, which happens four times a year is when options, futures and options on futures expire.

And I read that today has the most amount of put options open in a long time.

Pre open, the markets are down and should open well to the downside.

I will review the levels below, but I do want to mention a few positions that expire today.

The first is the short call on GOGO.? Based on the alert, you would be short the $20 call that expires today.

GOGO is trading under the strike, so it should expire today.
Leave the position alone and let the calls expire.

The next position is the long call on LUK.? It appears we were early on the entry.? I expected a bounce in the stock and a reversal, which did not happen. This is also why I suggested a small allocation in the position.

The next open position is the short $3 call on VNR.? I may suggest we take this off before expiration, so keep an eye out for a possible alert.

The final position is on ETE. Those calls will no doubt expire today.? All the pipeline stocks are tremendously oversold and ETE is no exception.? On the next bounce, I will suggest you sell more calls and most likely will add put protection as well.

Quite frankly, I have not seen a group of stocks so oversold in sometime.? But, that does not mean they can't drop further.

As a final comment to our open positions, there are two that we have not sold calls on ... X & ASNA.

ASNA just announced a $200 million buyback, which should be bullish for the stock. At the level it is trading at, they could potentially extinguish almost 15% of their outstanding shares.

Quite frankly, had I suggested a 1/2 allocation on this trade, I would be looking to add to this position.

And the final open position is X.? I felt that a selling climax happened last week.? Even with X selling off yesterday, this week's price bar is setting up to be an inside bar.

Depending upon how it closes today, I will be looking to adjust this position on Monday.

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

The VIX ended up closing at 18.94 or 19 cents above the 18.75 support level.

17.19 should be support now.? And two closes above 20.31 and the VIX should head to 25.

S & P 500 Cash Index:?

Major level - 2,093.80
Minor level - 2,085.98
Minor level - 2,070.33
Major level - 2,062.50
Minor level - 2,054.68
Minor level - 2,039.10
Major level - 2,031.30
Minor level - 2,023.48

The S & P 500 failed at the 2,062 support level.
The next level to the downside is 2,031.

Minor support is at 2,015.60.? If that cannot hold, look for a move to 2,000.

Nasd 100 (QQQ):?

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
Minor level - 108.60
Minor level - 107.03
Major level - 106.25

Two closes under 111.72 and the QQQ should drop to 109.

The major support level is 103.13.

TLT:?

Major level - 125
Minor level - 124.22
Minor level - 122.66
Major level - 121.88
Minor level - 121.09
Minor level - 119.53 *
Major level - 118.75
Minor level - 117.97
Minor level - 116.40
Major level - 115.62

The TLT is back above the 121.88 level.? A close today above 122.66 and it should move up to 125.

GLD:

Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13
Minor level - 102.34 *
Minor level - 100.78
Major level - 100.00
Major level - 96.88

As I have been saying, the GLD is trading between the 103 and 100 levels and yesterday it dropped and closed at 100.50.

If it breaks under 100, I would expect a move down to the 97 level.

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 - 59.60

The 59.38 level should be the objective.
56.25 is the level I would not expect the XLE to break on the first drive down there.

Apple:

Major levels for Apple are 125, 118.75, 112.50, 106.25, 100, and 93.75.
106 should be a major support level for Apple.?

106 should be the objective to the downside.? If Apple breaks under 106.25, it will be need two closes under 104.68 to move down to 100.

Watch list:
Bullish Stocks: PNRA, CI, ULTA, DPS, ADBE, KMB, FSLR, TSN, EL, LLY, TRIP, K, EXR

Bearish Stocks: CBRL, WBC, PVH, DDS, AXP, DVA, BG, WSM, CMI, BLUE, KEX, AKAM, OUTR, CF, CLH, WES

Be sure to check earnings release dates.