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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After the bounce on Wednesday, the S & P 500 gave back 7.25 points. It ended the day closing at 2,977.62.
The day did contract. The range for the day was only 23.57 points. And the daily average true range is now 30.29 points. So, the range contracted to about 78% of the average.
And the day did end up being an inside bar. This, as you know, is when the price bar makes a lower high and a higher low.
Typically, the market will expand off this formation. But, it usually does after a violation of either the high or the low of the bar. So, monitor these levels.
Yesterday's high was 2,987.28 and the low was 2,963.71.
Pre open, the S & P is trading about 8 points higher. Assuming this holds into the open, the market should open around 2,985 or about 2 points under yesterday's high.
Watch to see if it can take out yesterday's high. If it can't, a pullback would be expected.
Support should be in the 2,976 to 2,981 area.
The weekly range through yesterday has also contracted. The weekly range through yesterday is 55 points, compared with the weekly average true range of 76 points.
The week opened at 2,983.50 and yesterday's close was 2,977.62. And the midpoint for the week so far is 2,980.
So, the weekly bar is shaping up to be another doji bar.
Assuming this week ends with a doji, this will mean the market will have two consecutive doji bars.
This would certainly suggest we get an expansion. Assuming we don't get an expansion today, it would most likely happen next week.
The 2,980 area should be a key level to watch today.
Here are the Key Levels for the Markets:
$VIX:
Major level: 25.00
Minor level: 24.22
Minor level: 22.66
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 <
The VIX closed at 16.08 yesterday. The VIX did drop under the major 15.63 level and closed just above it.
Resistance should still be at 17.19. And yesterday's high went to 17.09 or 10 cents under it.
Watch the 15.63 level today. If it breaks under it, it should head lower. Minor resistance should be at 16.41 as well.
SPX:
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
Minor level: 2,773.45
Minor level: 2,695.35
Major level: 2,656.30
The S & P closed at 2,977.62. The S & P is holding just above the major 2,968 level. This level should still be support.
And watch the minor 2,978.50 level. The S & P should open above it and I would expect support at this level on a pullback.
Look for another run to the 3,007.85 level if it can hold the 2,978 level.
QQQ:
Major level: 196.88
Minor level: 196.10
Minor level: 194.53
Major level: 193.75 <
Minor level: 192.19 **
Minor level: 189.06
Major level: 187.50
Minor level: 185.94
Minor level: 182.81
Major level: 181.25
Minor level: 179.69
The QQQ closed at 189.38. Watch to see if the QQQ can hold the 189.06 level. If it can close above it, it should run up to 193.75.
The minor 189.06 level should act as support. If the QQQ can clear 190.63, it should head higher.
IWM:
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
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
The IWM closed at 152.38. At this point, the minor 154.69 level should be resistance.
And I do expect support at the 151.56 level. If this level cannot hold, I would expect the IWM to drop.
TLT:
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
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
Minor level: 135.84
The TLT closed at 142.38. At this point, I would expect resistance at 142.97.
Watch to see if the 140.63 level holds as support.
The TLT also had an inside bar, so watch for the violation of the high or the low.
GLD:
Major level: 150.00
Minor level: 148.44
Minor level: 145.31
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
Minor level: 136.72
Minor level: 135.16
The GLD closed at 141.79. Look for a move to 140.63.
And 142.97 should offer minor resistance on the upside.
A break under the 140.63 level should signify that the GLD will continue lower. But, until then, it should be support.
XLE:
Major level: 65.63
Minor level: 64.85
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 closed at 59.65. If the XLE is trading right around the major 59.38 level.
If this level cannot hold, I would expect a further selloff.
59.38 should offer support
The 30 minute chart is still bullish, but the midband is 59.84 and the XLE is just under it. It will have to reclaim this level to head higher.
AAPL:
Major level: 225.00 <
Minor level: 221.88
Minor level: 215.63 **
Major level: 212.50 <
Minor level: 209.38
Minor level: 203.13
Major level: 200.00
Minor level: 196.88
Minor level: 190.63
Major level: 187.50
Minor level: 184.38
Apple closed at 219.89. Yesterday's low was 218.83, which is just above the minor 218.75 level.
If this level cannot hold, I would expect a drop to 215.63.
218.75 should now be support.
Technical support is also at 218.
WATCH LIST:
Bullish Stocks: ORLY, LMT, NOW, MLM, STZ, FB, BABA, HON, KLAC, EXPE, MSFT, WMT, ATO
Bearish Stocks: NFLX, RARE, CLX, ETE, NTGR
Be sure to check earnings release dates.
