July 9, 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

Long August 7th-$20.50 Puts on VXX @ $1.83
Value-Wednesday July 8th close - $1.75

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Today's Working Orders

No working orders.

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After what appeared to be a major reversal day in the markets on Tuesday, the markets gave back most of those gains, with the S & P 500 closing down almost 35 points yesterday.

A number of factors seem to be contributing to this. There is the Greek debt situation where the market seems to move on every good news- bad news discussion.

And if that is not enough, there has been a major sell off in China.

Sprinkle in the FOMC, with the whole investing community trying to figure out when the Fed will raise interest rates.

Add in a new earnings season and let's top it off with the NYSE having a computer glitch that kept the exchange closed for a few hours yesterday.

Sell in May and go away is starting to sound good.

As far as price action is concerned, even though yesterday was a large swing and bearish close, it was still an inside day.

An inside day is when the high is less than the high of the prior day ... and the low is higher than the low of the prior day.

This usually leads to an expansion of volatility , as if we have not seen enough.

Another scenario is that today forms another inside day.
In that case, Friday could be rather explosive.

The major price action about yesterday is that it was another selling climax.? The down to up volume measured 16.70 to 1.? There was been two selling climaxes in seven days.

If you put on the VXX trade, you no doubt realize that the VXX closed higher than when we initiated the position.? However, the puts are down slightly.

You maybe wondering how can that be?

The reason is because of volatility expansion.

The market is up pre open.? Watch the levels.

Here are the key levels for the markets.

Stocks...
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VIX: ?
Major level - 21.88
Minor level - 19.53-2 close above & 21.88 is objective
Major level - 18.75
Minor level - 17.96
Minor level - 16.41
Major level - 15.63
Two closes under 17.96 and objective is to 15.63

Yesterday, the VIX closed at 19.66, so if the VIX closes above 19.53 today, look for it to head higher.

20.31 should act as resistance. ?

Watch the open on the VIX.? The next level up should act as resistance.

S & P 500 Cash Index: ?

Major level - 2,093.80
Minor level - 2,070.33
Major level - 2,062.50
Minor level - 2,054.68 (two closes under 2,054.68 and the objective is to 2,031)
Short term levels are 2,070.32 and 2,078.15

After closing at 2,081.34 on Tuesday, the S & P reversed and closed at 2,046.68 yesterday.

A close under 2,054.68 today would be bearish, with an objective down to 2,031.? If it opens above 2,054.68 today, look for that level to act as support.

The 2,062.50 level should also act as support.

Nasd 100 (QQQ):? .

Major level - 109.38
Minor level - 108.60
Minor level - 107.03
Major level - 106.25
Minor level - 105.46

Pre open, the QQQ is trading around 107.24.? If it can close above 107.03 today and tomorrow, the QQQ should run to 109.38.

TLT: ?

Major level - 121.88
Minor level - 119.53
Major level - 118.75
Minor level - 117.96
Minor level - 116.41
Major level - 115.63

Yesterday, the TLT had it's first close above 119.53, closing at 120.29.? A close today above 119.53 and it should move up to 121.88.

117.96 should act as support.

GLD:

Major level - 114.06
Minor level - 112.89
Major level - 112.50
Minor level - 112.11
Major level - 110.94
Major level - 109.38

The GLD closed yesterday at 111.09, just above the 110.94 level.? If it can close above 110.94 today, it should move up to 112.50.

XLE:

Major level -? 75
Minor level - 74.21
Minor level - 72.66
Major level - 71.88
Minor level - 71.09
Major level - 68.75

A close under 74.21 and the objective is 71.88.
71.88 is a ket price level for the XLE.? Two closes under 71.88 and it could drop to around 60.

Keep an eye on this.

Watch list:
Bullish Stocks: ORLY, RCPT, CBRL, EW, DIS, NKE, CELG, SWK, DE, FB, EA

Bearish Stocks: PCLN, BIDU, CMI, MON, CVX, WDC, SNDK, WDAY, GMCR, SNDK and QCOM