Intra-Week Support and Resistance - November 7, 2011

[Billy]

Forum Clusters 111107.xlsx

Both robots are neutral and we still need to wait for strong signals before acting.

The fresh IWM weekly pivot and floor levels will likely guide intra-week support and resistance without much impact from other timeframes. Indeed, it is a very rare occurrence when a new week starts with the 3:1 Reward/Risk optimal buy and short limit entries both coinciding exactly with weekly floor levels.

If the IWM robot was not neutral, he would seek to enter long at the weekly pivot (73.67) or short at weekly R1 (76.37). So, the fresh weekly levels seem to have been targeted by large players’ reward/risk algorithms and this confirms that there is some credibility behind the multi-pivot methodology. In practice, in a neutral environment, since IWM traded only less than 10 minutes on low volume near 73.67 on Friday, we can expect an initial pullback to the same area, followed by a quick rally to WR1 (76.37) where profit-taking is likely to happen.

If this set up is slightly bullish, it is certainly not indicative of long-term conviction by market makers who seem to restrict their inventory accumulation/distribution plans to the weekly timeframe. However, the long term path of least resistance is northward with a total floor resistance strength of 24 vs. a total floor support strength of 34. As long as quarterly (71.25) and yearly pivots (71.84) are not decisively breached, and barring catastrophic news, we can expect a market see-sawing its way higher on average.



For GDX, the multi-pivot path of least resistance is also northward with a total floor resistance strength of 24 vs. a total floor support strength of 32.
Billy