October 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

GOGO? Long at $19.93
Premium collected - $1.25

NCR Long Jan 15 $27 Call
NCR Short Jan 15 $32 Call
Net Debit - $0.60

X Long at $14
Short September 25th $14 Call @ $.54

ASNA Long at $14.20
Premium collected - $.30
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Before I discuss the markets, I want to make a quick comment on the alert I sent out on NCR yesterday.

The trade suggestion was based on an open position.

If you were not in the original position, then you do not adjust the trade.

Understand, I will NEVER recommend that you sell a short call.? Had you taken that trade, that is what you would have done.

I will never suggest you sell a call naked.

And speaking of the NCR trade, I had a few emails when the trade was initiated.

Most of the comments centered around how thin the options were.

And yes, I realize that they were.

That is why when we put on the position, it was a debit spread.

If the market makers are going to screw us going in, I will hit them back by selling against the position. And that is what we did.

By trading around the short call position, we have been able to bring the net cost of the position down from $3.00 to $.60.

And still maintain the maximum gain at $5.00 per contract.

The ideal situation is to bring the net cost down to zero with max profits of $5.00, but that may not be possible with only 3 months to expiration.

But still, we are in a position to gain $5.00 with a risk of $.60.

Those are the type of odds I like.

Did I mention that I would NEVER suggest selling a naked call?

The S & P blew through the 2,000 level yesterday and closed above the next confirming level, which is 2,007.82.

A close today above that price and it should move up to 2,031.

The XLE continues to advance. Look to buy pullbacks.

Here are the key levels for the markets.

Stocks...
?
VIX:?

Minor level - 29.68
Minor level - 26.56
Major level - 25.00
Minor level - 23.44
Minor level - 20.31 *
Major level - 18.75
Minor level - 17.18 *
Major level - 12.50

The VIX has now had two closes under the 18.75 level.

I would expect a move back down to 12.50.
As the VIX continues down, expect the market to continue up.

S & P 500 Cash Index:?

Major level - 2,031.30
Minor level - 2,007.82 *
Major level - 2,000.00
Minor level - 1,976.62
Major level - 1,968.80
Minor level - 1,945.32
Major level - 1,937.50

A close today above 2,007.82 and the objective becomes 2,031.

Nasd 100 (QQQ):?

Major level - 109.38
Minor level - 108.60
Minor level - 107.03
Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13
Minor level - 102.35
Minor level - 101.78
Major level - 100.00

The QQQ fell shy of the 106.25 objective yesterday by 2 cents.

Two closes above 107.03 and the target is 109.38.

TLT:?

Major level - 128.13
Minor level - 125.78
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

The TLT closed under 122.66, at 121.96.

A close today under that level and the objective should be down to 118.

GLD:

Major level - 112.50
Minor level - 110.16
Major level - 109.38 *
Minor level - 108.60
Minor level - 107.03
Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13

The GLD is back under the 109.38 level.

This market is one to avoid. But, we will continue to monitor to see if the downtrend reverses.

XLE:

Major level - 71.88
Minor level - 69.53 *
Major level - 68.75
Minor level - 66.41
Major level - 65.63
Minor level - 64.84
Minor level - 63.28
Major level - 62.50

Two closes above 69.53 and the objective becomes 71.88.? Look for lower levels to act as support.

Apple:

Major levels for Apple are 118.75, 112.50, 106.25, 100, 93.75 and 87.50.
100 should be a major support level for Apple.?

A close today under 110.93 and the objective is to 106.25.

Apple remains in a downtrend on the daily chart.

Watch list:
Bullish Stocks:? ORLY, PNRA, AAP, STZ, CLB, NKE, LEA, VRSK, EXR, TSO, MCD, VRSN, ATO, SBUX, CBOE,? CVC, PGR, RAI

Bearish Stocks: BIIB, ILMN, UTHR, VRTX, MDVN, R, FOSL, ADSK, RAX, ESPR, CUDA, GPS

Be sure to check earnings release dates.