In Cash – April 27, 2012

The IWM robot was stopped out of its short position yesterday and will stay in cash today due to a lack of LT/ST edges for a new position.

After closing above the 50-day moving average (81.60), IWM will need to hold its gains to confirm the bullish bias presented by the multi-pivot outlook. One or two days of potential whipsaws around the 50 dma are tolerable after 3 days of strong advance and the Quarterly pivot (80.28) near the rising 5-day VWAP (80.13) should offer a good support in case of a dip.

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The GDX robot will also wait in cash today. The PM MF was especially strong at the close and switched the EOD model to a buy mode, but lacking any LT/ST edges advisable by the GDX robot.

Both models are now protected by the 0% - porosity level. Today’s porosity is 0.125%.

GDX is still above the 2-month old downtrend line and Quarterly S1 (45.75), setting up a serious trend reversal pattern. All but 4 components of GDX were actually up yesterday and the flat close of GDX was only due to the negative earnings reaction for the second most heavily weighted stock GG, but clearly there was no contagion to the other components. In the context of a strengthening MF, all this bodes well for an imminent intermediate term bullish move and it is coherent with last Monday’s successful test of the Semester and Yearly S1 at 44.77. Because the 5-day VWAP (45.62) is just flattening out and equals Daily S2 today, I wouldn’t be surprised to see a dip down there, which would also coincide with a retest of Quarterly S1 (45.75) and of the old declining downtrend line.
Billy

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