January 4, 2016 - 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 - $1.95
Short Jan 8th-$21 Call - $.40

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

ETE Long $14.05
Total Premium collected - $1.05
Short Jan 8th-$13.75 Call

P Long $13.38
Short Jan $14 Call - $.35
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The year 2015 closed out with the first annual loss in over 6 years.? For the year, the S & P 500 closed down 14.96 points.

Pre open the markets are selling off on the first trading day of 2016.? The S & P 500 was off almost 40 points, but now have trimmed those losses a bit.

The culprit seems to be a sell off worldwide, both in Europe and China.

In the special report I wrote back in August, I mentioned that China could be the wild card that derails our bull market.? And today's action seem to confirm that.

The key level for the S & P 500 is 2,046.90.? If there are two closes under that level, the market could drop to 2,000.

Also, last Thursday, the S & P could not hold the 2,070 level and ended up closing just above 2,062.50, at 2,063.

I will be working this week on a projection for 2016.
The daily chart for all major markets have moved into downtrends.? So, short term momentum has already shifted to the downside.

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 closed last week at 18.21, so a close today above that level and it should continue up.

I would expect a spike up off the open in the VIX.

25 should be strong resistance on the VIX, so if it does get through that level, expect it to continue higher and the markets to fall more.

S & P 500 Cash Index:?

Minor level - 2,101.16
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

Based on the pre open activity, the S & P 500 should be trading just above the major 2,000 level.

1,968 is the outer level I would not expect the S & P to break under on the first attempt.? In other words, that should be the outer limits of a drop.

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

The QQQ close at 111.86 yesterday, under the major 112.50 support level.

109.38 should be major support.? If that level cannot hold, the next major level is down at 100.

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 should pop based on a flight to quality.

If the TLT can close for two days above 122.66, 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

The GLD is also moving up with this sell off.
However, I would still want to see two closes above 103.13 to get excited about gold.

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

The XLE is still retesting the 59.38 level.
If it breaks under 56.25, look for a move to still lower levels.

Having said that, if the XLE can close above 60.16 today, it should move up to 62.50.

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.?

It looks like Apple is heading towards a move down to the lower band on the daily chart, which is 100. Depending upon how Apple trades around that level will determine if it heads lower or becomes a buy at that point.

Watch list:
Bullish Stocks: RCL, KMB, JCOM, VRSK, DLR, ATO, MO

Bearish Stocks: CMG, CXO, SLB, AAPL, ZBRA, CFR, WSM, KEX, JWN, RY, MGA, KORS

Be sure to check earnings release dates.