Forum Clusters 111216.xlsx
Thursday’s buying in IWM was not supported by large players as the 4-day 20DMF RT chart makes most apparent with its negative divergence from IWM’s bounce. Options market makers are trying to lift price closer to maximal pain (73.50) but large players are distributing quietly during the move. We may expect more of the same on this Friday’s quadruple witching options expiration.
With the 20 DMF now in shorting mode, favorable ST and LT edges settings and a likely gap up above the limit entry price of 71.69, the robot should be able to enter its short position at the open price above the limit. The initial stop will be adjusted 3.54% above actual entry.
It is weird to enter a short trade just before the expected Christmas seasonal bullishness, but as long as large players don’t show confirmation, it’s likely better to stay in their good company. Things should become clearer after opex.
The clusters didn’t change much after Thursday for GDX and a bounce back to WS3 (54.20) shouldn’t be a surprise. It would relieve the oversold condition and could help the start of another strong wave down. The trailing stop is now just 9 cents above the entry and we don’t risk much anymore waiting for a “cover your short” signal. There is still no edge for entering a new position today.
Billy
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