New IWM Robot Short Setup - May 7, 2012

The IWM robot is looking to enter a new short position at a limit price of 79.81 with an initial stop at 81.73 that equals Weekly R1 just above the 50-day moving average (81.47).

The futures are pointing to a much lower gap down opening price, so we’ll be disciplined and wait for a sharp bounce before acting. The multi-pivot analysis is suggesting a bounce failure at the confluence of Quarterly pivot (80.28) and Weekly pivot (80.33), hence the 79.81 as a limit entry price for a 3:1 reward-risk ratio. The first resistance cluster has more than twice the strength than the first support cluster and it should help limiting any bounce to the declining 5-day VWAP (blue line now at 80.87).

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The GDX robot LT/ST settings found no edges for entering a new short position. The major LT floor level to watch is the dual Yearly and Semester S1 ( 44.77) in confluence with the new Weekly pivot (44.78). It is acting as strong resistance and stopped GDX in its rally attempt last Friday. Another failure would increase the odds for another selloff while a successful breakout would be a necessary step before a potential turnaround.

Today’s porosity for the RT model is 0.099%.
Billy

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