Don't Get Trapped! - June 26, 2012

The IWM robot is trailing its stop down to 79.17 and is ready to enter a secondary short position at a limit of 77.47. The strong support confluence of a rising 200 dma (76.13) and QS1 (75.90) allowed for a close above WS1 (76.20). If the confluence confirms its supportive role for igniting a bounce, a test of WPP (77.64) is the most logical next step, near the secondary entry price. I must stress that all IWM correlation scores were barely hurt by Monday’s plunge and that market structure is still able to turn quickly into a summer rally configuration. I find no reason to be overly aggressive in any direction for the short term.

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On GDX, the failed undercut of YS1/SS1 (44.77) followed by a close above the 50 dma (44.99) on strong PM Money Flow and a GDX Model RT cash signal suggests that a temporary key bottom has been made at Monday’s lows (43.87). The multi-pivot cluster structure is strongly bullish and the ratio of positive IBD’s Accumulation/Distribution ratings among component stocks is at a new recent high. The PM stocks declined on lower volume and rallied on higher volume pointing to institutional support.
Billy

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Hi Billy,

With the ex-dividend gap down, does that affect the pivot calculation (and thus affect the stop and support cluster)?

Thanks.

[QUOTE=Wei;22919]Hi Billy,

With the ex-dividend gap down, does that affect the pivot calculation (and thus affect the stop and support cluster)?

Thanks.[/QUOTE]

Theoretically, everything should be adjusted. But all backtests have shown that it didn’t make any difference on average. If IWM was trading near the stop, I would advise to adjust it for your discretionary trading on the ex-dividend day only. But the robot stop is far away today.
Billly