Large Players Missing From The Bullish Picture - March 12, 2012

Technically, if putting aside EV and classic volume analysis, the uptrend is intact and there is now massively strong floor supports from the new clusters. Last week, IWM’s bounce from its pullback below the 50-day moving average led to an outperformance for the week but without large players stepping in with size. They were clearly hesitant as if they were betting on lower prices soon to really fuel their risk appetite.

But it can’t be said that they were selling aggressively and it is probably a sign that a true topping process on the longer timeframes hasn’t started yet. The market is just very vulnerable now in the short term until another sharp and fast plunge is heavily bought by institutional investors.

The robot can’t predict what will happen, it can just read where the edges and probabilities are heading to and they all favor short positions and setups. But the edges are running on thin ice as the 20 DMF is struggling to avoid a whipsaw. All in all, these are not very “sexy” conditions for an active trader as they lead to much nervousness and anxiety with small losses piling up while the main 20 DMF indicator refuses to cover its short signal at the +0.10% porosity level. The risk for whipsaws is further increased by the usual opacity and volatility during Opex week. Trading very small size and staying disciplined with the robot’s logic instead of thinking too much is my personal handling of this situation.

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Nothing much is happening on the GDX front as gold miners are quietly building what increasingly looks like a bear flag consolidation under the 50-day moving average (54.50). Such patterns most frequently lead to another selloff, but the PM Money Flow is showing some moderate strength in the process and we need to be patient until the next big price move. For our European readers, the US switched to Daylight saving Time this Sunday and Europe will catch up only on March 31st, so the US markets will open one hour earlier than usual for Europeans.
Billy

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