Some Relief - January 27, 2012

The IWM robot could enter its new short position at the opening price of 79.86 and 5 cents below yesterday’s high. Thereafter the market was distributed all day long, trading below VWAP with a falling 20 DMF and with rising volume on down stocks. This was the worst day of the month from a price/volume perspective and – at a minimum – signals that buying pressure is losing steam. Wednesday’s latecomers large buyers may be trapped by other large sellers who accumulated much earlier in this uptrend.

So far the statistics mentioned yesterday are in line with the market’s action and another opportunistic short entry today into strength at the limit of 79.85 is well advised.

Now that IWM is extended away from the strong 200-day moving average (75.70) support, it is facing a strong resistance cluster just above our entry while looking exhausted. The two support clusters taken together are weaker (7 + 5= 12) than the first resistance cluster (13) strength. This is a favorable multi-pivot outlook for shorting.

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The GDX Money Flow was also weak and closed at 1.51% or about 0.75 day away from the 1.35% sell threshold. But we’ll officially wait for a daily close below that level to sell at the open on Monday. A combined short signal will depend on the ATR evolution.

The very strong first resistance cluster includes the 200-day moving average (57.46) and Yearly plus Semester pivots (55.88) . It won’t be broken easily.

The trailing stop (51.61) is raised once again and breaks even with the initial entry
Billy

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