Pre-positioned Goldman Sachs and other bears were clearly invincible yesterday with a violent raid below the 50-day moving average (78.05). Only the support line from the 06/04 bottom and the Weekly pivot (76.62) were able to slow them down during the last 150 minutes of trading. These were lying just underneath the Daily S3 (76.86) where 95% of a trend day move can be expected to be complete.
Market structure was little impacted by the sell off and the IWM correlation score still has plenty of room before breaking below its rising 20 dma. This suggests that a deeper pullback can potentially turn into an excellent reward-risk long setup.
There are no big scheduled news today, so I expect a very technical day. A weekly close above WPP would keep the multi-pivot bullish bias intact and bulls will likely try to feed a bounce holding above the rising trendline during the day, barring any massive selling due to some surprise headline. In case of a follow-through day to the downside, I would not advise chasing short entries before a clear break below the 200-day moving average (76.06).
The IWM robot is looking to enter a new short position on a bounce at a limit of 77.75 with an initial stop at 79.57 or 2.35% above entry. Monthly pivot (77.83) and the 50-day moving average (78.05) do offer a nice confluence of significant potential resistance just above the limit entry were bears are likely to resume selling.
At last, the initial short position of the GDX robot made some progress below the entry (45.36) and the stop could be trailed down to 48.66. The LT/ST settings of the robot are pointing to a strong edge for shorting at a limit of 45.50. But I still recommend aggressive position sizing only after a decisive break below Yearly and Semester S1 (44.77), the strongest of all support confluences.
Billy
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Originally Posted by Billy
