Forum Clusters 110614.xlsx

Interestingly, the market is following the shake-out reversal scenario we discussed in the forum yesterday. The second step for the scenario is that if market makers have now filled their positions at a great VWAP, they will gap up to force the masses to cover their shorts and chase them to the upside. So the key today will be to observe if they are actually facilitating rising prices after the gap up.

Based on current pre-market bids and asks quotes, IWM will likely gap up above MS2 (78.09) and daily pivot (77.92)at the open. Any retracement that can hold at these 2 reference levels will be a most positive sign that the bounce has actually started and could last for more than one day.

The first resistance cluster is easy to beat today up to WPP (78.91). It will converge with the declining 5-day moving average (78.99) so this might mark the high for the day.

A close above QS1 (79.32) would offer a very weak resistance cluster tomorrow with a trend day setup if overnight news and futures are quiet.

Billy

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