Buyers in Control – June 24, 2011

[Billy]

Forum Clusters 110624.xlsx

After the big gap down yesterday, near our initial entry price, all indices quickly traded back above their intraday VWAP until the close. This is a confirmation that large players in their majority were in an accumulation opportunity mood. The intraday evolution of the 20 DMF (+ 277% at the close) gave a further indication of large players’ determination.
IWM closed well above the 4-day VWAP (79.77); now buyers are collectively in strong control and in the green for the week while the bears are trapped.
Next week, the start of monthly and quarterly windows dressing tactics may reasonably be expected, further decreasing the selling pressure for the short term.
For the first time since the lows, the second cluster resistance is now around the equilibrium monthly pivot (84.14) and it becomes a realistic target for the end of June.
The first resistance cluster is very heavy however, and IWM may become very choppy and underperforming the other indices while slowly attacking each floor level. The closer to WR3 (81.98) it can end today, the better the outlook for next week. In case of a new pullback, no worry above QS1 (79.32), just like yesterday.
Billy