Robots Are Short - June 12, 2012

[[B]I]Please note that I will be unable to post the charts and comments tomorrow as I will have a medical check-up from early morning.[/I][/B]

The IWM robot will enter a short position today at a limit price of 75.23 and with an initial stop 2.87% above the execution price.

If the resistance confluence of Quarterly S1 (75.90), Weekly Pivot (75.88) and the 200-day moving average (75.79) holds today at the close, a retest of Yearly Pivot (73.55) looks most likely. Since yesterday’s reversal occurred right at Monthly pivot (77.83), Monthly S1 (72.69) becomes a logical target for a new down leg. Also, like we saw during opex week in May, sharp price declines early in the week when there are massive put open interests can lead to forced delta hedging by market makers, further pushing prices down.

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The GDX robot is still giving a green light for entering a secondary short position at a limlt price of 46.50.
The first support cluster remains extremely sturdy with a confluence of 50-day moving average (45.24) and Yearly/Semester S1 (44.77). I can only repeat that light position-size is recommended until we see a decisive break below that confluence. Most of the selling in GDX is due to the fact that they are included in equity sell programs, but precious metals prices are holding relatively well. Also, GDX component stocks are now collectively amongst the best Accumulation/Distribution ratings group from IBD after being the worst group one month ago. These ratings are based on 3-months institutional activity and are giving clues that institutions are increasingly positioned long for the intermediate term horizon.
Billy

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