New Setups - May 15, 2012

IWM made another step down to a new 70-day low yesterday. It is now sitting midway between the 50-day moving average (81.13) and the 200-day moving average (75.29) with about equal total clusters strengths in both directions. This is a playfield for more choppy action with downward price trend and 20 DMF biases. Due to the short term oversold condition, the IWM robot short setup may need time to develop in a winning trade. Bounces can be shorted and the short entry limit is set at 78.10 with an initial stop 2.24% above the actual execution price. Any gap up today higher above the limit, the better our entry will be.

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The GDX robot will enter a new long position at the open today with an initial stop 7.27% below the actual execution price. This stop will likely sit near the dual Yearly and Semester S2 (38.12) offering a very strong support confluence in case of a final capitulation flush out fall. But the PM Money Flow is at 0.07% and it only needs to close today at the negative porosity of - 0.107% to trigger a protective sell signal at the open tomorrow. Therefore the risk of this trade is less stressing than the initial stop could lead us to think of.
The RT model will also trigger a sell signal if it hits the negative porosity intraday. But, in that event, we recommend staying in cash because of the LT/ST settings combination for a short trade.
Billy

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Attached is a gif of the 20 DMF closing values back to 6/30/11. At the close today we broke a trendline connecting the
8/8/11 and 3/6/12 lows. Could this be a harbinger of increased institutional selling? We will know soon enough.
Best regards,
Robert