Let’s Go Long – November 15, 2011

[Billy]

Forum Clusters 111115.xlsx

After weeks of neutrality, the IWM robot has finally found a high probability trade on the long side.

From a reward-risk perspective, the logical reward could be a test of the 200-day moving average (77.58), at the top of the second cluster resistance. The actual selling pressure strength is quite light between the limit entry of 73.28 and the 200 dma: excluding daily levels, only weekly pivot (73.88) and weekly R1 (76.14) could act as potential speed bumps. At least, this is the theory in a news-neutral environment.

On the risk side, I feel quite comfortable with the setup. Not only do we have a fail-safe stop and reverse signal pending if the 20 DMF turns short, but we can also enter the trade very near a massive support cluster with a total strength of 27. Yearly pivot (71.84) and quarterly pivot (71.25) have acted as a successful support confluence many times in the trading range and the initial stop (68.69) will be further protected by the very symbolic 50-day moving average (69.89). If the robot can enter today below the limit price of 73.28, he will adjust his stop 6.26% below the actual entry execution price.

Tuesday is also a potential turnaround day in opex week and that scenario will be helped by a rather important POMO and Twist operation from the FED. The usual pattern would be weakness early in the day followed by a strong intraday reversal. All in all, a pretty satisfactory setup for an opportunistic trade objectively confirmed by the robot.
Billy

[Neil Stoloff]

Attachment 11412

If the robot can enter today below the limit price of 73.28, he will adjust his stop 6.26% below the actual entry execution price.


Billy

[/ATTACH]

I must ask, Billy: How did you determine that the robot is a male? (Until now, in my mind's eye she had been a curvaceous woman.)

Cheers,

Neil

[Billy]

I must ask, Billy: How did you determine that the robot is a male? (Until now, in my mind's eye she had been a curvaceous woman.)

Cheers,

Neil

Neil,
The robot is actually God! Now, how do you determine if God is a male?
Billy

[Neil Stoloff]

Neil,
The robot is actually God! Now, how do you determine if God is a male?
Billy

Funny -- At the poker table when a player is all in they sometimes pray to God to win the pot; I can't resist saying, "She's too busy to listen to your prayers."

I've got women on the brain, I guess....

Neil

[nickola.pazderic]

At least according to Frank Sinatra

Don't like the song much, but it is an American song and an American market.

In any case, may She be with you.

Question: (Can someone post a max pain chart?)

Also, TVIX can serve as an excellent hedge when necessary. A little goes a long way.

[Andrei]

Question: (Can someone post a max pain chart?)

http://leavittbrothers.com/blog/?p=5033

[nickola.pazderic]

From Andrei's link:

Overall Conclusion: The bears again placed bets to profit from a sell-off, and again, barring solid selling pressure the rest of the week, they will lose. Flat trading between now and Friday’s close would cause lots of pain. However, a slight move up would cause even more pain.

Luck be a Lady

[nickola.pazderic]

for what it is worth, a chart:


Attachment 11420Attachment 11420

[hgsfan]

Please excuse my ignorance but what does DPP stand for? thanks in advance

[hgsfan]

I take that DPP means Daily Pivot Point? Thanks in advance

for what it is worth, a chart:


Attachment 11421Attachment 11420Attachment 11420