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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The S & P 500 continued its bullish move. Monday closed at 3,288.13. The market closed up 22.78 points on the day.
This was the first close above the major 3,281.20 level.
This strong bull move just continues higher. It certainly looks like the S & P will test the upper band on the daily chart.
The upper band is 3,317.13. And at this point, the market is now within 30 points of that target.
Assuming the market does hit the upper band, it will mean that that market has run from the lower band to the upper band. And it would have made this run in about one year.
The question will be ... what will happen when it does hit the upper band?
A couple of comments about the upper band. First, is the fact that the upper band is resistance. Resistance that is until it is violated.
I typically look for resistance at that extreme level. But, it does not mean that the market cannot take it out and trade for a sustained period of time above it.
I have shown many examples of stocks and markets that have traded above the upper band for a long period of time.
The second fact is that the minor level above 3,281.20 is 3,320.25, which is within 3 points of the upper band.
And when a major level is taken out, the next minor level often acts as resistance.
So this should be a key level to watch.
And with the sentiment indicators at levels not seen in a long time, profit taking would not be out of the question.
But, at this point, the daily price bar remained strongly bullish. Yesterday closed at the upper end of the daily bar.
So, the odds still favor the high being violated before the low.
Support from yesterdays daily bar should be in the 3,278 to 3,280 area.
And the support area from last weeks weekly price bar, which is in the 3,249 area, should still be valid.
This week we begin earnings season.
We will get earnings from a number of major banks. This morning we will hear from JPM and WFC. And Wednesday afternoon, we get earnings from GS and BAC.
And Thursday morning, we get earnings from MS.
Here are the Key Levels for the Markets:
$VIX:
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
Minor level: 11.72
Minor level: 10.16
Major level: 9.38
The VIX closed Friday at 12.32. The VIX continues to trade around the major 12.50 level.
This is now at the long term major support level. Watch this level for support. If it does break under 12.50, watch the next minor level, which is 11.72.
13.28 should be resistance. 13.55 is technical resistance.
S & P 500:
Minor level: 3,320.25 **
Major level: 3,281.20 <
Minor level: 3,242.15 **
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
The S & P closed at 3,288.13. The next minor level on the upside is 3,320.25. Two closes above this level and the S & P should head up to 3,437.40.
3,281.20 should now act as support.
Technical support is still at 3,290.
QQQ:
Major level: 221.91 <
Minor level: 221.13
Minor level: 219.56 **
Major level: 218.78 HIT!
Minor level: 218.00
Minor level: 216.43
Major level: 215.65
Minor level: 214.87
Minor level: 213.30
Major level: 212.50
Minor level: 211.74
Minor level: 210.17
Major level: 209.39
The QQQ closed at 220.95. This was the first close above the 219.56 level. A close today above this level and the QQQ should head up to 221.91.
The QQQ closed above the upper band on the daily chart. The upper band is 220.45, so the QQQ is 50 cents above it.
So, the QQQ continues to be the strongest of the major markets.
Support should be at 218.78. And technical support is at 219.50.
IWM:
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
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 165.96. The objective for the IWM should be up to 168.75.
The 164.06 level should offer support. And yesterday's low was 164.07, so expect this level to continue to be support.
And the 165 area should also offer technical support.
TLT:
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: 135.84
Minor level: 132.81
Major level: 131.25
The TLT closed at 138.02. A close today above 138.28 and the TLT should test 140.63.
137.50 should now be support. And technical support should be at this level as well.
Short term charts remain bearish. The TLT needs to clear 138.15 to head higher.
GLD:
Major level: 150.00
Minor level: 149.22
Minor level: 147.67 **
Major level: 146.89 Hit
Minor level: 146.11 **
Minor level: 144.54
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 GLD closed at 145.82. With a close under 146.11 today, the GLD should continue down to 143.75.
The GLD would have to reclaim 146.11 to head higher.
The GLD did pullback from its overbought condition.
137.50 should be strong support. So if the GLD does break under it, I would expect it to head lower.
The key level is 134.38 on the downside. If the GLD has two closes under this level, it could drop to 125.
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 59.83. The objective should be up to 62.50. But, at this point, if will need to clear 60.16. And yesterday, for the second day, the XLE closed just below it.
Watch for support at the 59.38 level.
Technical support is still around 58.50.
AAPL:
Minor level: 315.63 **
Major level: 312.50 Hit
Minor level: 309.38
Minor level: 303.13
Major level: 300.00
Minor level: 296.88
Minor level: 290.63
Major level: 287.50
Minor level: 284.38
Minor level: 278.13
Major level: 275.00
Apple closed at 316.96. Apple closed above the minor 315.63 level for the first time. A close today above it and the objective should be to 325.
The upper band is 308.54 and should now be support.
312.50 should offer support.
The 309 area should offer technical support.
WATCH LIST:
Bullish Stocks: GOOGL, CHTR, LMT, ADBE, NTES, MA, AAPL, NVDA, GS, RTN, FB, LHX, CME, MCD, HD, COUP, MSFT, SPOT, SPLK, UHS, IBM
Bearish Stocks: AAP, FFIV, DLTR, TSCO, CTSH, DD, FIZZ, THS, RAMP, BERY, CIT, SIX
