Clean Progress - May 25, 2012

We can only acknowledge that the rally attempt is progressing cleanly both for IWM and GDX with strong money flows. The old downtrend lines are now decisively broken and have been retested successfully jointly with the 5-day VWAPs. The retest was also in coincidence with the 200 dma (76.38) for IWM and QS2 (41.95) for GDX. When potential support levels become real support, the positive action must be respected.

GDX is particularly impressive, outperforming GLD by 9.20% so far this week and with GLD down 2%. But it is in extremely short term overbought territory while facing an intimidating resistance cluster from Yearly S1 (44.77) up to the 50 dma (46.09). I expect some sharp reversal somewhere within that cluster as it is necessary to unwind the overbought condition and I am inclined to book profits and prepare for at least a short day-trade soon.

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IWM has now a huge floor support and has about 5% to run higher before meeting serious resistance at Quarterly pivot (80.28). It can’t obviously make it easily in a straight line, but has a perfect configuration for facilitating a high volume follow-through day in the coming days.
Billy

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