Fascinating GDX and Solid IWM Setup - July 13, 2011

[Billy]

Forum Clusters 110713.xlsx

For a change, let’s start with the GDX setup evolution that I find fascinating from a multi-pivot perspective. The daily clusters developments since the robot entered at 53.26 on 6/23/2011 are providing all the hallmarks of a well-planned and organized accumulation campaign by floor traders and market makers. You may review chronologically the past daily clusters charts to see what I mean. The progression was calibrated to provide growing support and diminishing resistance within ATR bands each and every day without exception.

The total potential selling pressure ( 3+ 14) of 17 is now very easy to beat with the total potential buying pressure ( 17 + 19) of 36. And this on the day where SPP and QPP (56.61) were decisively conquered before a final attempt at breaking the 200-day moving average (57.77)! Don’t expect the professionals who accumulated with such an orderly program to become weak hands here. Once the 200 dma would be broken, their algorithms tell them that there will be no serious resistance during a run to QR1 (62.12). GDX was not driven by retail players so far and these will likely take the lead on a breakout of the 200 dma. The momentum that will follow will allow professionals to distribute for an easy profit on the way up.
Prior to the potential breakout, any pullback to near SPP/QPP (56.61) is a major buying opportunity and today’s limit entry at 56.90 is optimal for a successful trade.



The robot could enter long IWM at the open (82.88) near the lows for the day and right above a massive first support cluster with strength of 25. Unless we live the end of the European banking system this week or some other political calamity, potential floor resistance is so meager that a quick retest of YR1 (85.68) is realistically in the cards. Our stop at 81.03 can only trigger after all supports would break loose, and a plunge to the 200-day moving average would become a most serious probability. Billy