3 Attachment(s)
Robot Setups and First Trading Day Of The New Year - January 3, 2012
[ATTACH]12117[/ATTACH]
IWM is starting the new year sandwiched between the 200-day moving average (76.22) and the 50-day moving average (72.83). These two strong levels have special importance since they haven’t changed overnight whereas all other floor levels have seen dramatic calendar adjustments.
The 20 DMF finished 2011 very weak and remains in a short signal. The ST/LT settings point to an expected 3-Day short gain between 1.22% and 1.45% from the previous day's close, with a win ratio of 70.54%. So, the odds favor a test of the 50 dma (72.83) which stands -1.25% below Friday’s close as the first market move of 2012.
But that move won’t be obvious or easy as it would need to penetrate deeply within an extremely strong support cluster encompassing the new yearly pivot (73.55), semester pivot (73.27) and monthly pivot (73.24). All these levels are important inventories equilibriums for market makers where they will start scaling into long or short inventories depending on their perception of large players order books and plans. The only perception tool at our disposal is the RT 20 DMF but this first shortened week of the year will most likely be another round of observation and choppiness before gradually building any trend on growing volume.
If the short entry limit (74.53 and 1 cent above Friday’s high) is hit, you must accept the risk of a move up to the 200 dma (76.22) area just below the initial stop (76.47) which allows for some porosity above the 200 dma.
To be honest with you, the contradictory picture of the robot settings with the new clusters strengths in a post-holiday week doesn’t make me feel very comfortable about turning aggressive yet. I’ll continue to trade half my usual position size in IWM.
[ATTACH=CONFIG]12115[/ATTACH]
GDX will start the year on a slightly bullish precious metals sector money flow and a secondary buy signal with a limit long entry at 51.76. The real-time PM MF is only 0.75 day away from issuing a sell signal and it provides a low-risk entry opportunity as a fail-safe stop will trigger if a sell signal is confirmed at the close.
There is a 59.19% probability of a + 7.65% profit from today’s limit entry on a 10-day horizon. That would lead GDX somewhere between quarterly pivot (54.78) and the dual yearly + semester pivot (55.88). Such a test of longer timeframes floor equilibriums levels in the first two weeks of a new year would be quite logical, barring major macro news surprises. The move can be facilitated by a relatively weak first resistance cluster above entry.
Thanks to the tight risk in case of a fail-safe stop scenario, I plan to trade this setup aggressively.
Billy
[ATTACH=CONFIG]12116[/ATTACH]
