Patience Required For The Bears - September 14, 2011

[Billy]

Forum Clusters 110914.xlsx

The IWM robot is holding its short position and indicates a good ST/LT edge setting for entering a new short position today at the same initial limit price of 70.81. Our weekend recommendation of delaying new short entries and waiting for today’s opportunity is coming to fruition.

Volatility as measured by ATR percentages continues to decline, slowly tightening the support and resistance clusters’ width and strength. The consequence is that the floor outlook is increasingly shifting in favor of the bulls for the next two days. Reward-risk ratios of new long entries are improving for institutional investors and their algorithms know it. There is also the support of HFT and program trading confirmed by cumulative TICK.

The running VWAP from Monday’s opening is 67.93, giving a comfortable average profit of + 1.84% to the average buyer of the last two days. This indicates that only a very harsh pullback could really spook them to reverse their positions before reaching the most likely target of Yearly pivot (71.84), below the robot’s trailing stop of 72.20. The probability of hitting SS3 (67.70), the strongest floor support within the first support cluster, is only 39% today. This probability is based on the comparison between the distance from Tuesday’s closing price to SS3 and the ATR.



ATR percentages are dropping fast for GDX too and the tightening of the resistance clusters from yesterday offers a total floor resistance strength of only 12 compared to 34 yesterday! This bodes very well for traders who have entered new positions yesterday or would do today at the same buy limit of 63.25.
Billy

[nickola.pazderic]

TNA turns over. Nice!