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
Total Premium Collected $1.95
ASNA Long at $14.20
Total Premium Collected $0.75
DUST Long $4.50
Total Premium Collected $0.70
RRC Long at $11.85
Total Premium Collected $0.70
RRC Long at $9.20
RIG Long at $8.81
Premium Collected - $1.45
FEYE Long at $17.18
Total Premium Collected $1.06
X Long at $11.33
DOCU Long Feb $75 Call @ $2.45
DOCU Short Feb $80 Call @ $0.70
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Yesterday, I suggested a debit spread on DOCU. The idea was to trade next month's calls. If DOCU does not follow through as I expect, I will close this deal quickly.
The market ended the day closing marginally higher. After hitting a high of 3,337.77, the market dropped to close at 3,321.75.
The drop from the high was 16 points. And the daily price bar closed at 10% of the range. This now suggests that the low should be violated before the high.
Yesterday's low was 3,320.04.
The key for the short term is that the market is right at the upper band on the daily chart. The upper band is 3,338.58 and yesterday's high went to within 1 point of it before the pullback.
We know that the upper band should contain 99.9% of all the price action. So, this is a key price level at the moment.
This level is resistance until it is violated.
Short term charts remain, so I don't see the market rolling over just yet.
And at this point, we have not seen a large spike in the VIX. I would expect a spike in the VIX to indicate that a top is forming.
Having said that, the VIX and the S & P did diverge again yesterday.
They both closed higher, which is not the normal relationship. In fact, this was the second time in 5 days that the VIX & the S & P diverged.
At this point watch for support from last week's weekly price bar. This support level is around 3,300. And I would expect this level to hold on a pullback.
Pre open, the S & P is trading about 6 points lower. This suggests an open around 3,315, which would put the open below yesterday's low.
Watch to see if the market can reclaim yesterday's low of 3,320.04 on a bounce.
This afternoon, we get earnings from INTC and SWKS.
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 12.91. This was the second close above 12.50 in two days. But, it still had not managed to close above 13.28.
I would at the very least expect the VIX to close above 13.28 to signal a pullback. Two closes above it would be even more indicative of a top.
So this should still be resistance until it is violated.
S & P 500:
Major level: 3,427.40 <
Minor level: 3,398.35
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 3,321.75. Even with the intra day sell off, the S & P still managed to close above the minor 3,320.25 level.
Because the market has confirmed a move higher, I am still biased to the long side.
And to void the bullish objective, the S & P would need to close under 3,321.75. But, if it does, I would expect strong support at the major 3,281.20 level.
This now suggests that the S & P should head up to 3,427.40. Watch for support at the major 3,281.20 level.
Technical support is around 3,308. And the weekly support level around 3,300 should also be watched.
QQQ:
Major level: 225.00
Minor level: 224.22
Minor level: 222.69 **
Major level: 221.91 HIT!
Minor level: 221.13
Minor level: 219.56
Major level: 218.78
Minor level: 218.00
Minor level: 216.43
Major level: 215.65
Minor level: 214.87
Minor level: 213.30
Major level: 212.50
The QQQ closed at 223.87. The objective for the QQQ should still be for a move up to 225.
But, like the S & P, the QQQ is right at the upper band on the daily chart. It actually closed above the band, which is now 222.98.
221.91 should be support. And technical support is at 222.
IWM:
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
Minor level: 154.69
Minor level: 151.56
Major level: 150.00
The IWM closed at 167.56. The next upside level is 170.31. Two closes above this level and the objective should be to 175.
For the IWM to drop to 162.50, it will need two closes under 167.19.
The upper band is 168.83 and the IWM closed under it. This level should now be resistance.
168 is now technical resistance. The IWM would need to clear this level to head higher. If it can't, a run down to 165 is possible.
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 Hit
Minor level: 135.84
Minor level: 132.81
Major level: 131.25
The TLT closed at 139.96. The TLT hit a high of 140.14. The target is still to 140.63.
Watch to see if the TLT clears this level this morning. If it does, I would expect it to continue higher.
The 140 area should be resistance. And technical support is around 138.
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 146.79. Watch the major 146.89 level. If the GLD can clear this level, it should move higher.
146.89 should be minor resistance, until it is violated.
The 145 area should still offer technical support.
Watch the 146.11 level on the downside.
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 57.50. The objective should be for a drop to 56.
Another significant fact is that the XLE closed under the midband, which is 59.00. This level should now be resistance.
The XLE is oversold short term and a bounce should be expected. If it does bounce, it could go to around 59.
AAPL:
Major level: 325.00
Minor level: 321.88
Minor level: 315.63 **
Major level: 312.50
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
Apple closed at 317.70. The objective for Apple should be for move up to 325. But, I will throw caution to the wind, by saying that Apple, like the major indexes is right at the upper band on its daily chart.
The upper band is now 317.56 and Apple is just above it.
315.63 should offer support.
The 315 area should offer technical support.
WATCH LIST:
Bullish Stocks: GOOGL, TSLA, SHOP, LMT, NOC, NTES, ADBE, AAPL, NOW, LRCS, COST, MA, AAPL, LRCX, INTU, BDX, NVDA, FB, HD
Bearish Stocks: FICE, CVX, CLB, MDP, TEX
