A Sucker’s Jump - January 4, 2012

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After its gap up that allowed for an excellent reward-risk short entry, IWM went nowhere and fell continuously below its intraday VWAP after 11:00 am. This left the average buyer a net loser for 2012 so far… This is the first hint that professionals want to sell into strength.

The 20 DMF finished net negative for the day with a rush to the exits at the close by large players. This is the second hint that professionals have no plan to accumulate long positions from here.

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IWM is now stuck between two messy support/resistance clusters which are mainly neutralizing one another. The LT/ST settings still favor the short side and I keep playing it light personally. I want to see a failure of support at the long timeframes pivots below before increasing my position.

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Contrary to IWM, GDX spent most of the day above the intraday VWAP and, after a brief lunchtime stop-fishing expedition, roared higher into the close on a very strong money flow.
The average buyer in 2012 is here a winner, professionals are buying and we are now 2.4 days away from a potential sell signal. A rather weak floor support/resistance imbalance can ease a pullback today which I expect to be bought again by large players judging by the GDX robot money flow and the LT/ST settings and odds. Our trailing stop was raised to 49.72.
I keep playing this setup aggressively and will avoid selling any leveraged position too early.
Billy

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