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View Full Version : … And Now Looking To Go short! - June 8, 2012



Billy
06-08-2012, 05:32 AM
I hope you did follow Pascal’s timely RT advise to avoid entering a long position yesterday near the closing bell when the buy limit was hit. The IWM robot will cover its long position at the open and will try to enter a new short position at a limit price of 77.30 with an initial stop (79.27) right above the 50-day moving average (79.04).

Yesterday’s gap up was not chased by large players and institutional profit-taking did hit the 20DMF all day long to the point of triggering a sell signal. In spite of all the tiring blah-blah about QE3 dreams and delusions, the market remains in a severe correction. If some large institutional players want to reverse it into a renewed lasting uptrend, they have to act today and accumulate long term positions around the 200-day moving average (75.72). Hints that they are actually buying should be seen in a Friday’s 20 DMF real-time uptrend coupled with a daily/weekly close above intraday VWAP, 5-day VWAP and Weekly pivot (75.15). Otherwise, the probability is getting high that new lower lows might be seen next week. Anyway, this market is much prone to choppiness and whipsaws and my preference remains to keep low overnight exposure.

14608

Both the RT and EOD GDX models turned short yesterday with significant LT/ST settings edges. The GDX robot will enter a short position at the open with an initial stop 9.24% above execution price.

From a multi-pivot perspective, there is a hugely powerful support cluster encompassing QS1 (45.75), the 50-day moving average (45.36) and dual YS1/SS1 (44.77). Furthermore, there is the uptrend support line from the 5/16 bottom. Normally, such a cluster should favor a technical rebound – even after an undercut of the trend line. I would then be cautious and start with only a small short position-size until we see a daily close below the declining 50-day moving average (45.36 now but expected to be 45.28 at the close), which would coincide with a close just below the hourly Ichimoku cloud. This would confirm a sustainable trend reversal and I would increase my position from there.
Billy

14609

Pascal
06-08-2012, 10:35 AM
Just a small note here: for the IWM robot to reach 77.3, we will need to have a rather strong positive MF. Since the 20DMF is rather close to the 0 level where shorts will be covered, in all probabilities, the 20DMF will issue a cover signal in RT before we reach the 77.3 buy point.

In other words, money is moving out, but the support/resistance balance will not allow us to enter a short trade, except if we go through the strong support. In such a case, the MF will be negative and the IWM Robot will allow for a lower short entry price.



Pascal

Billy
06-08-2012, 11:37 AM
There is a potential Head & Soulders pattern with a declining neckline forming on GDX. The declining neckline improves much the probability of success for short trades. A breakdown would happen around 44.75 and would also decisively break the rising uptrend line and all major floor support with a target around 40.75.

Notice also the deterioration of Relative Strength vs. SPY and vs. GLD while the right shoulder is forming. I intend to short aggressively at the first signs of RT PM MF weakness with a stop above the right shoulder near 47.00.
Billy

14613

Billy
06-08-2012, 11:56 AM
I made a typo. The target is around 41.75 equivalent to a retest of the 5/23 low.

Billy

pdp-brugge
06-08-2012, 02:39 PM
Pascal , Billy,

The 20DMF is about to cross above 0. Is there a porosity level for the 20DMF today?

PdP

Pascal
06-08-2012, 02:47 PM
Pascal , Billy,

The 20DMF is about to cross above 0. Is there a porosity level for the 20DMF today?

PdP

The porosity is fixed at -0.11% on the way down after having crossed above 0.
We will need to complete the minute back-test to better define the porosity level.

We just sit at 0, the 20DMF RT is thus almost back to cash. In such conditions, do not enter the IWM Robot advised position.



Pascal

14614

Wei
06-08-2012, 03:39 PM
If the MF goes above 0 and then goes back down again, that's another RT short signal, correct?

Billy
06-08-2012, 03:46 PM
If the MF goes above 0 and then goes back down again, that's another RT short signal, correct?

Correct, but with a porosity of -0.11% that must be broken and if the TEV extension on inversed ETFs is above 4% (this last condition can't be computed RT for the time being).
Billy

Pascal
06-08-2012, 04:08 PM
Correct, but with a porosity of -0.11% that must be broken and if the TEV extension on inversed ETFs is above 4% (this last condition can't be computed RT for the time being).
Billy

As a matter of fact, after a short signal has been covered, the second short does not need an inversed ETF confirmation. We will turn short again either if the 20DMF RT falls below the -0.11% porosity OR if the inversed ETF indicates a short signal.


Pascal