Tutorial Intro: Path Of Least Resistance

[Riskslayer]

Hi Billy,

I'm considering a secondary short position on IWM this afternoon as IWM has cleared 82.82, and it looks like its stalling in the zone you mention in your note. Moreover, *my stop* on the trade would be the existing position stop and its pretty tight @ <0.8% (I would stop out at 83.44).

The "Day MF Strength" as of 1:12 pm ET is 109.5% is this very strong intraday 20DMF within the context of your note?

Thanks,

Shawn

[Billy]

Hi Billy,

I'm considering a secondary short position on IWM this afternoon as IWM has cleared 82.82, and it looks like its stalling in the zone you mention in your note. Moreover, *my stop* on the trade would be the existing position stop and its pretty tight @ <0.8% (I would stop out at 83.44).

The "Day MF Strength" as of 1:12 pm ET is 109.5% is this very strong intraday 20DMF within the context of your note?

Thanks,

Shawn

Shawn,

Our observation is that the timeframe that really matters intraday for the 20 DMF is the last 30 minutes of trading. It can turn the day MF on a dime. So at this stage you must make a bet that the long exhaustion scenario will develop until the close and that buy programs will be switched off. The price of the bet is the stop you choose.
For full disclosure, I already made the same bet as you entering TZA at 35.66 with a tight stop at 34.87. Be careful at the open tomorrow, Markettells just issued statistics for the day prior to Memorial Day Holiday with a very high percentage of historical occurences closing in the direction of the open. Volume will be low and likely unable to make a big inflection in price after the open. So, respect your stop if it is hit and we open higher tomorrow.
Billy

[Pascal]

As the 20DMF is detecting some weak selling in the first hour of trading and since IWM has reversed from its resistance cluster, I believe that the robot will not reach its ideal short position.

So, we'll probably be in cash for the close of today. Without a bounce to the shorting zone, it will take a break down through the 50MA for the robot to find a new ideal set-up.



Pascal