Buyers in Control – June 24, 2011

[Billy]

8999

After the big gap down yesterday, near our initial entry price, all indices quickly traded back above their intraday VWAP until the close. This is a confirmation that large players in their majority were in an accumulation opportunity mood. The intraday evolution of the 20 DMF (+ 277% at the close) gave a further indication of large players’ determination.
IWM closed well above the 4-day VWAP (79.77); now buyers are collectively in strong control and in the green for the week while the bears are trapped.
Next week, the start of monthly and quarterly windows dressing tactics may reasonably be expected, further decreasing the selling pressure for the short term.
For the first time since the lows, the second cluster resistance is now around the equilibrium monthly pivot (84.14) and it becomes a realistic target for the end of June.
The first resistance cluster is very heavy however, and IWM may become very choppy and underperforming the other indices while slowly attacking each floor level. The closer to WR3 (81.98) it can end today, the better the outlook for next week. In case of a new pullback, no worry above QS1 (79.32), just like yesterday.
Billy

8998

[adam ali]

...traded back above their intraday VWAP until the close. This is a confirmation that large players in their majority were in an accumulation opportunity mood.

Billy, this is an interesting observation. From your experience, is this a strong, reliable market tell? Or something less so...

[Billy]

...traded back above their intraday VWAP until the close. This is a confirmation that large players in their majority were in an accumulation opportunity mood.

Billy, this is an interesting observation. From your experience, is this a strong, reliable market tell? Or something less so...

Adam,

It is a strong, reliable indication that large players are cleverly accumulationg at the lowest average price for LONGER term inventories.
Think like you were one of them. You have a plan to accumulate over many days and you statrted to do so last Monday. At the close, the intraweek 4-day VWAP was 79.77. Today you want to accumulate below the expected IWM intraday VWAP on weakness. Since we have initial weakness, the best course of action is to accumulate around 79.77, so as to keep your VWAP in line with the weekly VWAP, but below the intraday VWAP.
Just look where IWM found its first support of the day, also above daily pivot (79.71) keeping a positive bias for the day. Billy
9009

[adam ali]

Thank you, Billy. Really helpful.

[brrim]

Billy; Your charts are a work of art and really provide a window to better understand daily price action. As I am new to PP, S&R levels and counts do you annotate these levels by hand? Which intraday program are you using and do you have any recommendations to help get me started creating similar charts.

Best regards,
Robert

[Billy]

Billy; Your charts are a work of art and really provide a window to better understand daily price action. As I am new to PP, S&R levels and counts do you annotate these levels by hand? Which intraday program are you using and do you have any recommendations to help get me started creating similar charts.

Best regards,
Robert

Robert,
I use TC2000 Platinum and Telechart 2007 Platinum from Worden.com. TC2000 is actually an advanced subscriber version of www.freestockcharts.com where you can do the exact same tasks for free, but with delayed intraday data and only from the BATS exchange.
All annotations are made by hand. Many EV members have offered their help for automating the charting process, but I have vigorously refused any automation on my side. It is the most important step of my daily routine, as updating manually allows me to note even the slightest details’ changes. On the weekend I often spend 2 or 3 hours just meditating on the clusters structures for IWM, SPY, QQQ and GDX, mentally visualizing all scenarios for the following week and anticipating the best trading plan for each case. Doing it manually helps me memorizing the dynamics at work because I have an excellent memory of everything practical I am doing.
Billy