Robot Comments for September 27, 2011

[Billy]

Forum Clusters 110927.xlsx

Cumulative TICK gave a strong program buying spree confirmation yesterday when conquering back the 3 key moving averages (1/2 day, full day and 10 hours) in the late afternoon.



This can make us feel uncomfortable with our short IWM position. However, volume and 20 DMF were moderate on the up move. It is looking like a typical end-of-month/quarter windows-dressing maneuver while filling Thursday’s gap. The most usual purpose of “filling the gap” by market makers and their programs is to allow large players to start distributing again at better prices since they obviously could not sell all of their very large positions in the 90 minutes following the FOMC announcement and have stopped selling after Thursday’s overnight gap because of a too low offered price. In other words, the buy programs are likely very short term and we are normally very near the start of a new massive wave of selling which can be delayed somehow due to window-dressing. This is confirmed by the repeated very strong short signal from the robot day after day.

The most logical resistance where sell programs should trigger again is at the confluence of SS3 (67.70) and QS3 (68.17). A strong gap up today above our day’s short entry limit of 66.88 can proactively be faded and shorted, even if gratification may not be immediate and obvious due to the end-of-quarter bullish bias.

I have made a multi-pivots simulation for next week with the new weekly, monthly and quarterly floor levels. The result is the same 66.88 recommended short entry limit, but with a much heavier floor resistance and selling pressure than what appears with the current levels.



The GDX robot is issuing a neutral buy signal today at the open, with a far away initial stop 9.93% below the open price. Today is opex expiration for precious metals futures and anything can happen in the coming hours. Closing above the 200-day moving average (58.45) would be a good start and a close above SPP and QPP (56.61), the upper border of the strong first support cluster, would comfort the new position.
Billy