As next week is both another shortened 4-day week (MLK Day Monday) and opex week, we must be ready for some surprises. Or for more complacency/lethargy. The IWM volatility as measured by ATR% is now back near its standard low bull market level (1.55%) at 1.69%, down from over 3% just a few weeks ago and 5% last summer. This is promoting better risk-reward setups on the long side for most trading systems and algorithms. For the IWM robot, it is reducing significantly the edges on the short side and tightening the floor clusters and stops.

I still view the current short setup mostly as a potential quick retracement from entry (Limit 77.53) to the 200-day moving average (75.99) next week. I already mentioned my fear of an opex pinning at the 79 strike instead. The initial stop at 79.24 should protect the position in that scenario and keep us short at an extremely overbought level. Maybe just in time for a 20DMF short signal confirmation. I see no need for betting the house on the robot ST/LT settings alone, but I would bet part of the garden as an initial position before scaling more aggressively after a 20 DMF short confirmation.

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The GDX position is now up + 6% from the initial entry (51.62) after several opportunities for secondary entries. It is becoming a little late in the game and the GDX robot can’t find any edge for a secondary entry today. If quarterly pivot (54.78) can hold as next support intraday, yearly and semester pivots (55.88) should be hit easily. The trailing stop can be raised to 51.06.
Billy

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