IWM Gap Up and Expected Supports & Resistances

[Billy]

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Interestingly, the market is following the shake-out reversal scenario we discussed in the forum yesterday. The second step for the scenario is that if market makers have now filled their positions at a great VWAP, they will gap up to force the masses to cover their shorts and chase them to the upside. So the key today will be to observe if they are actually facilitating rising prices after the gap up.

Based on current pre-market bids and asks quotes, IWM will likely gap up above MS2 (78.09) and daily pivot (77.92)at the open. Any retracement that can hold at these 2 reference levels will be a most positive sign that the bounce has actually started and could last for more than one day.

The first resistance cluster is easy to beat today up to WPP (78.91). It will converge with the declining 5-day moving average (78.99) so this might mark the high for the day.

A close above QS1 (79.32) would offer a very weak resistance cluster tomorrow with a trend day setup if overnight news and futures are quiet.

Billy

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[adam ali]

Billy,

This is a clear, concise and comprehensive trading plan as we move forward today - very helpful. Thanks for the great work.

[Harry]

Agreed. Billy's posts and Pascal's comments of the day are priceless! Really appreciate the effort to educate those such as myself.

[EB]

Agreed, all. Billy, I'm interested in your empirical observations of how trend day up[s] setup ahead of the open. Any particular characteristics of the markets you look for other than what you wrote here?


[Update: thanks. -Bob]

Bob,

Trend days are facilitated by very weak cluster resistances and even more if this characteristic is present the same day on all indices. This will be the case for IWM with a close above QS1 (79.32) and is already certain for SPY with a close above MS2 (128.69) and for QQQ with a close above MS2 (55.19).
I think the charts speak by themselves, just project what tomorrow clusters can be. All support clusters will be strong and all resistance clusters will be weak on all indices. Again, bad overnight news could negate the setup, otherwise the odds are for a trend day up. My definition of a trend day is a move from open to close with a range higher than the 20-day ATR.

Billy

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[johnboy70]

Billy,

What does VWAP stand for?

John

P.S. Oddly, enough I'm really beginning to understand everything you say. So, maybe there's some hope for me after all? Thank you very much for your patience and support!!!!!

[adam ali]

http://en.wikipedia.org/wiki/VWAP

[happy]

Billy, thank you again for your excellent comments!

[ilonaross]

@johnboy, or anyone else for that matter.

MIDAS Technical Analysis: A VWAP Approach to Trading and Investing in Today's Markets is sitting on my bookshelf unread and collecting dust.

Anyone interested in an online study group of this book?

Ilona

[Billy]

Ooops sorry I edited your post instead of replying to it. Billy

Bob,

Trend days are facilitated by very weak cluster resistances and even more if this characteristic is present the same day on all indices. This will be the case for IWM with a close above QS1 (79.32) and is already certain for SPY with a close above MS2 (128.69) and for QQQ with a close above MS2 (55.19).
I think the charts speak by themselves, just project what tomorrow clusters can be. All support clusters will be strong and all resistance clusters will be weak on all indices. Again, bad overnight news could negate the setup, otherwise the odds are for a trend day up. My definition of a trend day is a move from open to close with a range higher than the 20-day ATR.

Billy

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[Billy]

[QUOTE=Billy;13443]Any retracement that can hold at these 2 reference levels will be a most positive sign that the bounce has actually started and could last for more than one day.
QUOTE]

Billy, thank you again for your excellent comments! can you define a "reference level". is that 2 bars or ??

Happy,

Take a deep breath, concentrate hard, read my full sentences slowly, repeat as much as necessary and I'm confident you'll find the answer in your inner self,
Billy

[davidallison@gmail.com]

Billy,
I believe the next ex dividend dates for IWM are July 5th, 23rd September, 22nd Dec and a potential distribution on 28th December. This information is contained in the iShares 2011 Distributions Schedule. (hopfully attached) So this would impact IWM on the 5th of July, correct? The ex-date is 5th July, the record date is 7th July, and the pay date is 11th July.

I have a question about pivots and pivot clusters. Have you ever given any thought to monitoring pivots, other than intra day, to most recent data? So for example yearly pivots, would reflect the last 12 months, and therefore recalculated monthly? I have witnessed daily pivots working well. Yesterday’s IWM reversal at SI, with a very slight shake out, is a prime example. If we take a quarterly pivot, would S1, calculated for the last 3 months, not offer stronger support, then S1 calculated to the end of March? I am just struggling with the question of why, from the last trading day of June, to the first trading day of July, a quarterly pivot, support and resistance, should change so dramatically.

Dave

[Billy]

Billy,
I believe the next ex dividend dates for IWM are July 5th, 23rd September, 22nd Dec and a potential distribution on 28th December. This information is contained in the iShares 2011 Distributions Schedule. (hopfully attached) So this would impact IWM on the 5th of July, correct? The ex-date is 5th July, the record date is 7th July, and the pay date is 11th July.

I have a question about pivots and pivot clusters. Have you ever given any thought to monitoring pivots, other than intra day, to most recent data? So for example yearly pivots, would reflect the last 12 months, and therefore recalculated monthly? I have witnessed daily pivots working well. Yesterday’s IWM reversal at SI, with a very slight shake out, is a prime example. If we take a quarterly pivot, would S1, calculated for the last 3 months, not offer stronger support, then S1 calculated to the end of March? I am just struggling with the question of why, from the last trading day of June, to the first trading day of July, a quarterly pivot, support and resistance, should change so dramatically.

Dave

Thank you Dave. Yes, IWM will be impacted on July 5th and indicative limits and stops for related ETFs will be diifficult to make before the open on that day. We will comment on how to handle this in due time. We still need the same information for all related ETFs as they all have different distribution dates.

About your pivot and pivot cluster question, yes, it is interesting to track rolling timeframes like you are suggesting. And if anyone can prove an edge in doing so, I will be glad to investigate further.
What matters is to stick with what is working best for actual setups. The more levels you add to the system, like your rolling timeframes or Fibonacci levels or MIDAS and VWAP curves, the more neutral your setups will become and the more levels will be splashed all over the place on your charts. My definition of what is working best is what levels may be the most important in large players’s algorithms and what can really impact their trading plans. Actual experience and backtesting keeps proving that the current methodology is close to optimal, but I am flexible and open to modify the system with any proven additional edges.
Billy

[roberto.giusto]

As Billy pointed out some time ago, there is no such thing as the Holy Graal in trading.

But seeing the 20DMF in combination with the multitimeframe pivot system is nothing short of astonishing.

Once again I must say to both Pascal and Billy in one of their own languages: "Chapeau"

It is both a pleasure and a privilege to read and learn from all of you guys (included all the other administrators and members) every day.

Thank you.

Also, I would like to suggest a new name for the robots: the "Graalbots" :)

[Pascal]

As Billy pointed out some time ago, there is no such thing as the Holy Graal in trading.

But seeing the 20DMF in combination with the multitimeframe pivot system is nothing short of astonishing.

Once again I must say to both Pascal and Billy in one of their own languages: "Chapeau"

It is both a pleasure and a privilege to read and learn from all of you guys (included all the other administrators and members) every day.

Thank you.

Also, I would like to suggest a new name for the robots: the "Graalbots" :)

Sure! Wait until we have a set of losses... This will happen with a statistical certainty! As late as possible I hope though.


Pascal

[barbados11]

I just began following Billy's and Pascal's work again for real a few days ago. I agree with other members and am very impressed and grateful. This is very educational, enlightening and entertaining.

Thanks so much!

[roberto.giusto]

Sure! Wait until we have a set of losses... This will happen with a statistical certainty! As late as possible I hope though.


Pascal

I know they will come! But that won't change my mind! :)

[dario.lonati]

I agree with Roberto and all the others members.
Since I'm part of this group my trading life changed substantially.

Thank you to all of you!

"Holy Graal" or simply "Cup with handle": long and prosperous life to the EV group!

[happy]

Since I'm part of this group my trading life changed substantially. I have to agree with dlonati ... it has changed my trading life as well ... thank you.

I vote for the "Holy Cup with handle" :)

[davidallison@gmail.com]

Billy,
Thank you for the reply. I called DirexionShares with the question of ex dividend dates for TZA/TNA. They don’t publish future dates and the only way to know for sure of an impending distribution, is to monitor their web site regularly, as it is announced shortly before the distribution. The only thing he would tell me is they do it quarterly, but it might not be exactly correspond to ¼ time or 90 days from the last distribution. It could happen at anytime!
As for ProShares RWM/UWM/TWM they gave a similar answer. One can sign up for email notification, where they said they give about two weeks advance notice of an impending dividend, or monitor the web site.

I’m a believer in the robot signals and very much appreciate your running commentary. The entry prices for robot trades have been excellent.

This is just referring to the most recent relatively weak short entry, (not entered) which quickly turned to a very profitable trade. It was a few pennies out, which probably didn’t matter statistically. I was curious to know if a ‘recent history’ pivot cluster might have changed the short entry price decision point. If the robot entry price is based on a daily pivots, the question is extraneous.

I will try to compare the robot pivot clusters you post, to a ‘recent history’ pivot cluster, and pass along anything of interest. To me, it’s a fundamental question which arises from watching the pivot clusters you post and the trading action of IWM.

Thanks again,
Dave

[Billy]

Billy,
Thank you for the reply. I called DirexionShares with the question of ex dividend dates for TZA/TNA. They don’t publish future dates and the only way to know for sure of an impending distribution, is to monitor their web site regularly, as it is announced shortly before the distribution. The only thing he would tell me is they do it quarterly, but it might not be exactly correspond to ¼ time or 90 days from the last distribution. It could happen at anytime!
As for ProShares RWM/UWM/TWM they gave a similar answer. One can sign up for email notification, where they said they give about two weeks advance notice of an impending dividend, or monitor the web site.

I’m a believer in the robot signals and very much appreciate your running commentary. The entry prices for robot trades have been excellent.

This is just referring to the most recent relatively weak short entry, (not entered) which quickly turned to a very profitable trade. It was a few pennies out, which probably didn’t matter statistically. I was curious to know if a ‘recent history’ pivot cluster might have changed the short entry price decision point. If the robot entry price is based on a daily pivots, the question is extraneous.

I will try to compare the robot pivot clusters you post, to a ‘recent history’ pivot cluster, and pass along anything of interest. To me, it’s a fundamental question which arises from watching the pivot clusters you post and the trading action of IWM.

Thanks again,
Dave

Thank you for all your detective work about the ETFs distribution dates. We will also have to monitor yearly rebalancing of the Russell 2000 expected near the end of this month on top of the new monthly, quarterly and semester pivots. Now you wonder why top traders avoid trading at this time of year!

Please go ahead with your research on " recent history" pivot clusters. Something instructive will certainly grow out of it. This is something I would have already done myself if we had 48 hours a day!
Just avoid giving too much emphasis on isolated signals, only the long term average rate of success counts if you want to avoid random and outliers biases.
Billy