IWM’s Stop at 50-Day Moving Average - April 25, 2012

With IWM gapping up 1.20% in the pre-market and trading back above Quarterly pivot (80.28), it seems prudent to wait for a weakening RT 20 DMF before entering a secondary short position above the limit price of 80.03. The stop on the initial position is now exactly at Tuesday’s closing 50-day moving average (81.63) and it should be your reference for the risk measurement of risk-reward ratios of your short setups. This market wants to go up in the very short term and the FOMC announcement will likely not change much the expected short-covering mood. Once IWM will approach the 50 dma, there will not be many fueling catalysts left and it will be a strong psychological resistance to breach due to its confluence with Monthly pivot (81.96) and Weekly R1 (81.55). The 20 DMF will tell us by then if large players are selling or buying the bounce.

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There is no advised setup from the GDX robot. Precious metals are even more sensitive to FOMC’s wordings and comas than the equity markets, so today could be a big move day that could change both the GDX model outlook and GDX LT/ST settings.

The RT model is still short and today’s porosity is 0.144%. The model will cover its short position and turn long if the PM MF hits the average + porosity level. The oversold level at -1.45% is the other potential buy signal.
Billy

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