Neutral Day, Bullish Confirmations – December 8, 2011

[Billy]

Forum Clusters 111208.xlsx

“Currently it seems like a mission impossible for the bears to keep the markets at the lows (despite the news), while buyers are still eager to buy every dip, which will probably remain the prevailing theme for the time being.” Frank -Tradingtheodds.com

“Let’s all be honest – this is just fun foreplay as bulls and bears line up for the last big trade of the 2011 which will be the market’s reaction to next headlines from Europe starting with the ECB tomorrow morning and headlines from the Euro summit for the remainder of the week. From the price action, especially over the last two days, it is clear that the market wants to hold here and overtake the 200 day but hasn’t been able to do so yet with the level of uncertainty, fear and hope that continues to strangle the market like a tightly-wound Christmas scarf.” Charles Kirk – The Kirk Report

Nothing much has changed on a closing basis. But on top of the above quotes, Wednesday’s action confirmed again that large players are eager to buy below or at the intraday VWAP and at the VWAP anchored at the 11/30 opening gap. After filling Monday’s opening gap –which reduces the risk of a new sharp pullback – and bottoming just below the anchored VWAP, the first buy programs kicked in but with a concerning negative divergence from the RT 20DMF. This was positively resolved by a RT 20DMF breakout at 3:00 PM after IWM found new support on the intraday VWAP. The usual EOD selloff from day traders left the 20 DMF net neutral for the day.




I found also very positive that IWM bottomed without breaking the (65,5) volatility stop on the 30-minute chart which often offers an excellent reward-risk entry point within a sound uptrend.
The higher volatility has strengthened both the first support and resistance clusters and the balance of power is now 3-to-2 in favor of support holding and resistance breaking.



The evolution of IBD’s accumulation/distribution ratings is strongly biased in A and B ratings versus D and E and is another confirmation of institutional conviction.



In daily stage analysis, the percentage of stocks in accumulation and mark-up stages is growing fast and our positive reward-risk analysis for buying all intraday dips remain valid.
Billy