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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Last week ended with the S & P 500 continuing the sell off from Thursday. Friday, the S & P closed 20.03 points lower.
The market closed the week out at 3,215.63.
The market did in fact contract again. The range for the day was only 27.21 points. The range was about one half the daily average true range. And the daily bar closed at 57% of the range for the day.
This does give a slight bias to the high of 3,227.26 being violated before the low of 3,200.05.
The support area from Friday's daily price bar is in the 3,214 to 3,217 area.
The weekly price bar closed 9.1 points lower. This was the first lower weekly close after three consecutive higher closes.
With the weekly price bar closing at only 19.5% of the range of the weekly bar, the odds favor the weekly low of 3,200.05 being violated before the high of 3,279.99.
The weekly price bar also contracted. The range for the week was only 79.94 points, which was about one half the weekly average true range of 156.29.
So, these contractions add up to the fact that we should see an expansion.
And with a narrow range doji weekly bar, there are 3 levels to monitor. They are the high, the low and the close of 3,215.63.
Typically, the price will continue to move in the direction of a breakout.
Pre open, the S & P is trading about 14 points higher.
This projects to an open around 3,229. This would be about 2 points above Friday's high of 3,227.26.
On a sell off, watch Friday close of 3,215.63 for support.
On a continued move higher watch the weekly midpoint of 3,240 for possible resistance.
AMZN reports after the close on Thursday.
Here are the Key Levels for the Markets:
$VIX:
Major level: 34.38
Minor level: 33.60
Minor level: 32.03
Major level: 31.25
Minor level: 30.47
Minor level: 28.91
Major level: 28.13
Minor level: 27.35
Minor level: 25.78 **
Major level: 25.00 <
Minor level: 24.22
Minor level: 22.66
Major level: 21.88
The VIX closed at 25.84. The VIX closed .24 points lower for the day.
This does suggest that the VIX could test 28.13, but Friday the S & P and the VIX diverged.
They both closed lower on the day.
Watch for a break under 25 today. If it does, it should head lower.
Also, the midband of 24.77 should be watched today. If the VIX breaks under this level, it should head lower.
Having said that, the 60 minute chart is bearish, so I do expect resistance to come in. The likely area will be around 29 to 30.
S & P 500:
Minor level: 3,398.35
Minor level: 3,320.25
Major level: 3,281.20 <
Minor level: 3,242.15 **
Minor level: 3,164.00
Major level: 3,125.00
Minor level: 3,085.95
Minor level: 3,007.85
Major level: 2,968.80
Minor level: 2,929.75
Minor level: 2,851.65
Major level: 2,812.50
Minor level: 2,773.45
The S & P closed at 3,215.63. The S & P should drop to 3,125.
To invalidate this, the S & P would need to close above 3,242. So, watch this level on a move higher.
Technical support is around 3,210.
QQQ:
Major level: 268.75
Minor level: 267.18
Minor level: 264.05
Major level: 262.50
Minor level: 260.93
Minor level: 257.80
Major level: 256.25 Hit
Minor level: 254.69
Minor level: 251.56 **
Major level: 250.00
The QQQ closed at 255.56. The QQQ closed 2.45 lower.
The QQQ took out the major 256.25 target and got as low as 251.32 before closing higher.
Watch for support at 254.69. And watch the major 256 level, which should be support if the QQQ can clear it.
I said yesterday, the key at the moment is the upper band on the daily chart. That level is 267.61. The QQQ did sell off against the upper band.
Technical support is around 253.
IWM:
Major level: 156.25
Minor level: 154.70
Minor level: 151.56
Major level: 150.00 < HIT
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 146.08. Watch the minor 148.44 level. A close today under it and the IWM should drop.
Also, the IWM is just above the the midband, after taking it out. Watch to see if 145.92 can hold as support.
If it can't, it should drop.
The 145 area should be technical support.
TLT:
Major level: 171.88
Minor level: 171.10
Minor level: 169.53 **
Major level: 168.75
Minor level: 167.97
Minor level: 166.41
Major level: 165.63
Minor level: 164.85
Minor level: 163.28
Major level: 162.50
Minor level: 161.72
Minor level: 160.16
The TLT closed at 169.74, closing relatively flat.
The objective for the TLT should be to a test of 171.88.
168.75 should now be support. And 169 area is technical support.
GLD:
Major level: 178.13 HIT
Minor level: 177.35
Minor level: 175.78
Major level: 175.00
Minor level: 174.25
Minor level: 172.70
Major level: 171.89
Minor level: 171.11
Minor level: 169.54
Major level: 168.75
Minor level: 167.98
Minor level: 166.41
Major level: 165.63
Minor level: 164.85
The GLD closed at 178.70. Yesterday closed above the 178.13 level. And the upper band on the daily chart.
The upper band is 177.06 and the GLD closed just above it. The key now is what the GLD does now at the upper band.
XLE:
Minor level: 44.53
Major level: 43.75
Minor level: 42.97
Minor level: 41.41
Major level: 40.63
Minor level: 39.83
Minor level: 38.28 **
Major level: 37.50 Target - HIT
Minor level: 36.72 **
Minor level: 35.15
Major level: 34.37
Minor level: 33.59
Minor level: 32.03
Major level: 31.25
The XLE closed at 37.51. The XLE managed to close above the major 37.50 level again. If will need two closes above 38.28 to head higher.
The 36.72 level should now be support. 37.50 should also be support.
AAPL:
Major level: 400.00
Minor level: 396.88
Minor level: 390.63 **
Major level: 387.50
Minor level: 384.38
Minor level: 378.13
Major level: 375.00
Minor level: 371.88 **
Minor level: 365.63
Major level: 362.50 <
Minor level: 359.38
Minor level: 353.13
Major level: 350.00
Minor level: 346.88
Apple closed at 370.46. Apple closed $.92 lower. Apple got as low as 356.58 before closing higher.
Watch the 365.63 level for support. And close today above this level and Apple should test 375.
364 is technical support.
WATCH LIST:
Bullish Stocks: ISRG, GWW, HD, WST, TWLO, BABA, PANW, LIN, RMD, LH, MKC, CMI, FFIV, TTWO, KMB, TSCO, MUSA, GNRC, CHKP, DQ
Bearish Stocks: STZ, BA, ADP, VMW, CBOE, ADC, VFC, PLNT, WBA, CZR
