Don’t Force Any Trade Without A Clear Edge - October 13, 2011

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I will stay away from my screen today to avoid wasting my time and fighting any impulsive temptation to trade. There are still no edges to be found in any robot setups for IWM and GDX. Forcing any kind of long or short trade is a foolish game under present circumstances. Let’s wait for new high probability setups to emerge.

IWM is now really pressured by a most powerful first resistance cluster with a strength of 27.
The combined 2 first support clusters are only providing a relatively weak strength of (15 + 4 =) 19. The path of least resistance is now clearly shifting to the downside. Watch for the reaction at the 5-day VWAP (blue line = 67.64 and rising). This will clearly tell us if this is just a pause in the advance or another big downside reversal. In the latter case, we could watch a fast selloff down to the often discussed YS1 and weekly pivot 64.40 level.

Remember that down moves are usually 3 times faster than up moves! So, I have no regret being left out of a melt-up market on low volume if I can avoid the next sharp pullback and shake-out.

Billy

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