Robots Setups Outlook for July 15, 2011

[Billy]

Forum Clusters 110715.xlsx

SR1 and QR1 (62.12) remain the most likely top of the next GDX upleg. Meanwhile, the ETF takes a breather around WR3 (59.76) which is the normal highest area that can be expected on any bullish week.

Today’s buy limit entry at 58.88 is well supported by a strong first support cluster that includes a very resilient 200-day moving average. It was broken by an unfilled gap up on Wednesday; hence the possibility is here that a pullback attempt to fill that gap is in some large players’ programs. Indeed, the gap may have disturbed the full position VWAP in some accumulation programs that are now looking for a short term averaging down. That risk looks very affordable at today’s limit entry price. It would shake out some weak hands and bring more strong large players on board.



During yesterday’s last three hours, IWM traded in Tuesday’s pre-market area between SPP (82.19) and WS2 (82.44). So, this was actually a retest of this very strong cluster support area from where the robot had to wait for the open entry at 82.88. With some luck, the trade could have been entered as well around yesterday’s close!

It seems that large accumulating players have decided that it was not a bad idea to average down their VWAP in that zone while other nervous large players (with most of their bosses at the beach) were distributing their inventories in a foggy headlines news environment. This move looks more like a “career risk” management than a position risk management until proven otherwise.

Put open interest in IWM is high at and below the current level strike of 82, so the implied hedging suggests that most of the selling pressure on individual stocks is dead for opex day. The support/resistance strength ratios are much in favor of the bulls at today’s limit entry price of 82.21.
Billy