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IWM Robot Trading for May 23, 2011
The current IWM Robot short position is developping nicely since the entry at 84.81 on May12.
Judging by the pre-market activity, IWM is now trading between Quarterly Pivot (81.80) and Weekly S1 (81.52), not very far above the probable 3-day target of 81.16. This target is still within an acceptable range of porosity allowance below the QPP and WS1 cluster, so this area remains a potential bounce attempt zone. But trade optimization rules tell us not to cover our short before a homonymous signal from the 20 DMF with long probabilities edges!
A neat bounce starting near WS1 would potentially create a bullish bias for the rest of the week, as WS1 + porosity typically marks weekly reversal lows. However, a failed bounce is almost certain to create a selloff to Weekly S2 (80.17) which would confirm an intensification of heavy selling bias. From there, Quarterly S1 (79.32) is likely to be hit fast because IWM has shown a strong pattern of leaping by Quarterly levels recently and I would not be surprised if Monthly S2 (79.52) just above QS1 was programmed as an end-of-month target in major algo and HFT strategies.
Billy
confirming the numbers ...
[QUOTE=Billy;12569]Paul,
The "most probable" 3-day target is simply Today's optimal entry minus (the 3-day expected gain times the probabiliy of achieving this gain) 82.74- 82.74*(3.10% * 61.67%). Billy[/QUOTE]
Billy ... just to confirm the math, in your scenario above, the 'most probable' exit would have been $81.158 giving a 1.91% gain.
$82.72 * (0.031 * 0.6167) = $1.581
$82.72 - $1.581 = $81.1582
Can you please confirm that I am doing the math correctly?