IWM Very Strong Buy Setup – June 10, 2011

[Billy]

The IWM Robot’s job is not to try picking bottoms but to most objectively identify optimal risk-reward trading setup opportunities. Today is the best of all setups it could identify since it went online 3 months ago.
The limit long entry price of 78.39 is optimal in the sense that a decline to that level will be immediately cushioned by the confluence of MS2 (78.09) and WS2 (77.97). Even if these supports were to be broken, the rising 200-day moving average (76.74) will provide very strong support just above our initial stop of 76.64.
If today’s action is strong enough to miss the limit entry price, because the buy signal is most likely to remain active tomorrow, a close today above QS1 (79.32) may be discretionarily bought. The new official limit entry price for the robot will only be known after the close, but we are 100% certain that it will be above QS1. So, the nearest you enter to QS1 the better. I repeat that it is only valid with a close at or above 79.32.
As promised, I attach an excel file with IWM and GDX floor levels and clusters.
Billy
87358736

[Maxime A.]

FWIW, this is somewhat unrelated to the EV technique, but I find these charts interesting. That's not to say that we can't breakdown from here of course.

http://www.sierrachart.com/userimages/upload_2/130770402326.png
http://www.sierrachart.com/userimages/upload_2/1307703968589.png


http://www.sierrachart.com/userimages/upload_2/130770402326.png

http://www.sierrachart.com/userimages/upload_2/1307703968589.png

[Harry]

Billy,

These posting have been very informative and enlightening. Thank you for your time and please (if you can) keep up with these postings.

[happy]

Billy, first off ... thank you so much for your daily and intraday commentary ... it is GREATLY appreciated!

question for you ... from a discretionary perspective ... looking at the multi-timeframe pivots would imply we have much stronger resistance than support at the robot's limit price. I'm wondering again why the discrepancy. Is the pivot methodology a shorter term time frame (i.e. today is bearish, but the next three days are bullish) OR are you in a sense ignoring the pivot confluence levels and looking more so at the r/r ratio for the robot trade this time around?

[Pascal]

Billy, first off ... thank you so much for your daily and intraday commentary ... it is GREATLY appreciated!

question for you ... from a discretionary perspective ... looking at the multi-timeframe pivots would imply we have much stronger resistance than support at the robot's limit price. I'm wondering again why the discrepancy. Is the pivot methodology a shorter term time frame (i.e. today is bearish, but the next three days are bullish) OR are you in a sense ignoring the pivot confluence levels and looking more so at the r/r ratio for the robot trade this time around?

What do you call by "much stronger resistance than support". What numbers do you refer to?

For the robots, the decision on the trade direction is not taken by the pivots. It is taken by the statistical table (probability analysis). Then, once this is decided, it is the pivots that give the best entrance depending on the strength of the different floor levels.


Pascal