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GDX Trailing Stop Raised, IWM At Strongest Resistance - August 16, 2011
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The GDX position is setting up to conquer SR1 and QR1 (62.12), but initial resistance must be overcome first at MR1 (61.39) and WR1 (61.53). The first support cluster centered on the 200-day moving average (58.06) has been successfully tested each of the last three sessions resulting in higher lows and a higher high at the close yesterday. Although the ST/LT edges are weak today, from a pure multi-pivot perspective, any pullback to the limit entry buy point of 59.06 shoul be bought.
The position is now up 3.30% from the initial entry (58.96) and the trailing stop can be raised to 55.27.
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For IWM, in spite of a “formal” buy signal from the 20 DMF, no new position is advised for today. Indeed, as Pascal introduced in his “Comment of the day” paper yesterday and will explain again today, this buy signal has the highest probability of being premature and to lead to painful trading whipsaws in the coming days. The buy limit entry of a new long position (68.74) would be -4.23% below yesterday’s close, so let’s first watch if price can pullback in that area first.
IWM’s close just under yearly pivot (71.84) with a high for the day of 71.83, is a proof to me that this strongest of all floor levels is putting a cap on buy programs and could mark the end of the reflex rally. Price distortions stemming from Opex tactics may still change the plans, but the very strong first resistance cluster favors the very weak ST/LT edge found in shorting at or above 70.81.
As a pure multi-pivot guideline, aggressive traders may discretionarily use 70.81 as a shorting limit and 68.74 as a cover and buy limit, while the IWM robot stays in cash.
Billy
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