IWM Consolidation and GDX Upthrust – July 6, 2011

[ATTACH]9177[/ATTACH]

Both IWM and GDX buy signals settings are NEUTRAL for today.

The intraday 20-day Money flow closed slightly negative yesterday while the Russell 2000 index gained 0.19%. After trading ex-dividend, IWM closed pretty much flat for the day.
Note that backtests have found an additional edge by not adjusting the floor levels for dividends, hence the robot will change nothing to its limit and stop prices on ex-dividend days. The historical performance of the robot is also not taking into account the dividends, so they are all bonuses to the system.
So far, this is just a tight consolidation going on right in the middle between the two first resistance and support clusters. It is almost impossible to anticipate if YR1 (85.68) or WPP (82.59) – just below the day entry limit- will be tested first. The dilemma for market makers and their algorithms is that if the first resistance cluster (strength of 13) seems easier to break than the first support cluster (strength of 18), total selling pressure (13 + 13 =26) is still heavier than total buying pressure (18 + 5= 23) and the market is already clearly overbought in an illiquid summer order flow. Any bad surprise and news could quickly do much damage to long positions.
This “wait and see” attitude is reducing volatility and allows our trailing stop to rise even further closer to price.

[ATTACH=CONFIG]9175[/ATTACH]

The long GDX robot position had a wonderful day and is now supported by a meaningful first support cluster compared to all of the last 8 trading days. Maybe this is the start of a new uptrend, but GDX must at least close above the 50-day moving average within the first resistance cluster to confirm that large players are likely positioning themselves in anticipation of a debt ceiling resolution. At the minimum, a close today above YPP (55.19) is required for avoiding an annihilation of yesterday’s progress. Billy

[ATTACH=CONFIG]9176[/ATTACH]

Billy,

If possible, could you please add every day of analysis the [B][COLOR="red"]STOP level [/COLOR][/B]for GDX as you did for IWM.
Thank you

Pierre

[QUOTE=Pierre Brodeur;14337]Billy,

If possible, could you please add every day of analysis the [B][COLOR="red"]STOP level [/COLOR][/B]for GDX as you did for IWM.
Thank you

Pierre[/QUOTE]

Pierre, for keeping my charts as neat and clear as possible, I try to format the optimal chart size for easy clusters readings.
The stop will always appear if inside the format size. Today, the only reason the GDX stop was not shown was because it was so far below the clusters.
Here is an update chart with the stop. Good start of day for the bullish scenario above the 50 dma BTW!
Billy


[ATTACH=CONFIG]9187[/ATTACH]

Hi Billy,

Just for the sake of clarity, in IWM chart there is a support cluster with a total strength of 18. However with indicated levels there WPP + QPP + SPP + 50SMA = 2 + 5 + 6 + 4 = 17.

I know that there are also DS1, DS2 and DS3 in that vicinity. There must be some of these pivots, included in your total count of 18. Am I correct?

Thanks.

[QUOTE=Andrei;14352]Hi Billy,

Just for the sake of clarity, in IWM chart there is a support cluster with a total strength of 18. However with indicated levels there WPP + QPP + SPP + 50SMA = 2 + 5 + 6 + 4 = 17.

I know that there are also DS1, DS2 and DS3 in that vicinity. There must be some of these pivots, included in your total count of 18. Am I correct?

Thanks.[/QUOTE]

Correct. Daily S3 (83.05) is also included in the cluster. You can check the clusters in the file that I attach daily to my posts.
Billy