IWM Short Setup – November 22, 2011

[Billy]

Forum Clusters 111122.xlsx

That’s it, the robot gave us the green light for shorting! This is a promising setup with good potential: The limit short entry price (71.44) is right at the major resistance confluence of YPP (71.84) and QPP (71.25) which has been so critical for past inflection onsets. It is also right at the resistance of opex Friday’s lows where the RT 20 DMF witnessed large players distributing their shares. Their selling was moderate yesterday and they are likely waiting in ambush for Monday’s gap fill before selling or even shorting aggressively.

The strength of the first resistance cluster (27) is impressive enough to discourage most bullish traders in a Thanksgiving light trading backdrop and the path of least resistance is now southward bound. But the FED will pump up a record amount of liquidity today and some of it will likely be funneled into equities. Hopefully, just enough to hit our limit and without triggering a buy/cover shorts signal!

On the other hand, we would enter again with the fail-safe protection of a potential change of the model direction below the stop. The initial stop coincides with weekly R1 (74.15). It could only be hit with a massive upward trend reversal and the weekly pivot (72.71) can be expected as the maximum high area of a bounce in this downtrend.
Billy

[nickola.pazderic]

Trend following is not easy. So much contradictory information everywhere. I think of the Charge of the Light Brigade. But we have the good fortune to remain alive, so long as we honor the stops of the robot.

All that said, I watched TVIX yesterday. My biggest concern: this not skyrocketing. But I have read that long term down trends eventually lose their volatility.

Hope this goes well.

[pdp-brugge]

please excuse me for asking a novice question:

following the robot guidlines, I have chosen to place a buy limit order of TZA @ 32,38
what do I do if this limit order is not filled?

[Billy]

please excuse me for asking a novice question:

following the robot guidlines, I have chosen to place a buy limit order of TZA @ 32,38
what do I do if this limit order is not filled?

Each limit order is valid for one day only, so it should be cancelled at the close if not executed.
A new limit entry will be indicated for tomorrow. Sometimes it remains the same limit, sometimes not.
Billy