Best Quarterly Outlook I’ve Seen In Years - July 1, 2011

[Billy]

Forum Clusters 110701.xlsx

“Clap Clap!” to the market makers and their ever improving algorithms. Not only did they succeed to maneuver masterfully between floor clusters during their accumulation programs from the bottom, but they made sure to close the quarter on the strongest support clusters we’ve seen in years on all indices.
Thanks to the robots we could end the quarter in their good company and with the large players.




Like anticipated yesterday, cheating into the potential fresh monthly, quarterly and half-yearly floor levels, we now have a boulevard of dreams ahead of the bulls and a bumpy road to hell for the bears.
I don’t think the next cluster chart needs much comment. The bears will have a very hard time trying to break below this first heavy strong support cluster, while the bulls can easily buy every minor dips into the first resistance cluster. We are right at the daily downtrend line from the top and at a 61.8 % Fibonacci retracement, so a minor pullback or consolidation is likely today or next week. It’s certainly the worst reason to sell as long as IWM closes daily above the 50-day moving average.



The same outlook is in place for both SPY and QQQ. Note that QQQ closed around WR3 (57.02) and has a 95% probability of having made its high for the week. But starting next Tuesday the sky will be clear up to YR1 (59.02).




On the other hand, GDX’s cluster outlook deteriorated substantially overnight and is now facing two successive nearby resistance clusters with a total weight of 33! Total support is only one-third of that with a total weight of 11. All I know is that if the crowd wants to become emotionally bullish on GDX here, they won’t get any help from the market makers who can make much easier money on the overall market indices right now. Billy

[Andrei]

Congratulations on the brilliant setup, Billy!

I assume that your methodology of mutlitimeframe pivots can be applied to any stock or ETF. In this light I'll probably take some time on the weekend to identify potential support and resistance levels for US Dollar and Euro ETFs. Do you think it is viable idea? Or rather not, as market makers obviously don't trade currencies by ETFs, so those levels will mean nothing?

Regards.

[ernsttanaka]

Billy, The new half year and quarterly pivot points are closer together. The distance between r3 and s3 is less wide than they were previously. Could one conclude out of this that the next Quarter/half year will have a chance to be less volatile?

IWM for instance seems to be stuck between 820 and 850 (initially).

Ernst

[Billy]

Congratulations on the brilliant setup, Billy!

I assume that your methodology of mutlitimeframe pivots can be applied to any stock or ETF. In this light I'll probably take some time on the weekend to identify potential support and resistance levels for US Dollar and Euro ETFs. Do you think it is viable idea? Or rather not, as market makers obviously don't trade currencies by ETFs, so those levels will mean nothing?

Regards.

Andrei,
The multi-pivots are very effective in Forex. See John Person's books and website for this.
But you'd need to do such an analysis on Forex Futures with adjusted continuous contracts. I'm afraid ETF analysis would be a complete loss of time and even misleading since the pivots are very sensitive to the close, highs and lows. ETFs will give you the close, highs and lows for only 6 1/2 hour a day while Forex is open 24/24.
Billy

[Billy]

Billy, The new half year and quarterly pivot points are closer together. The distance between r3 and s3 is less wide than they were previously. Could one conclude out of this that the next Quarter/half year will have a chance to be less volatile?

IWM for instance seems to be stuck between 820 and 850 (initially).

Ernst

Ernst,

This phenomenon is simply the consequence of the last quarter and semester's ranges being almost identical. So their highs, lows and closes coincide in the pivot formulas. Therefore, I don't see any reason why volatility would be lower than during the previous quarter. The main reason volatility could decrease somehow would be a sustained bullish market which is often in synch with decreasing ATR%. That's great for the robot's risk management since the trailing stop will rise much faster with decreasing ATR%.
Now, the quarterly levels seem to become preponderant in market makers' algorithms and this can only be reinforced this quarter with their semester pivots confluences. I expect these levels will be much harder to break than usual.
Billy

[EB]

Andrei,
The multi-pivots are very effective in Forex. See John Person's books and website for this.
But you'd need to do such an analysis on Forex Futures with adjusted continuous contracts. I'm afraid ETF analysis would be a complete loss of time and even misleading since the pivots are very sensitive to the close, highs and lows. ETFs will give you the close, highs and lows for only 6 1/2 hour a day while Forex is open 24/24.
Billy

Over the last two years, I've tracked Billy's pivots system on both the EUR/USD forex pair and the USD Index ($DXY in TradeStation), which is about 55% weighted to the Euro currency. They are somewhat inverse to each other because of this high weighting. A major pivot cluster in often captures interim reversals.

[Andrei]

Thanks a lot Billy.

Yes, Bob. I want to complement SPY and IWM support and resistance levels with FX levels. This rally kicked off when USDCAD moved right up its 50ma on weekly timeframe. Of course 20DMF has detected course direction even before.

Although in the future the relationship and correlation between dollar, euro and equities may change (I'm reading about structural inflation down the road), for now it may prove useful.
Your chart is really loaded... I'll have to study it on weekend.