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View Full Version : No Reversion To The Mean - October 4, 2011



Billy
10-04-2011, 05:57 AM
10692

Please make sure to read today’s Pascal’s comment of the day about the 20 DMF, the potential bottom process and the next buy signal.

After yesterday’s plunge, the IWM robot is now trailing the stop (65.48) well below the initial entry (68.05) providing a worst-case unleveraged gain of + 3.78% on the trade.

IWM is into a bearish trend-following setup after failing so miserably to hold YS1 (64.40). There is no hurry to cover short positions as long as it stays under that level, even if it were to be retested on a snap-back reflex bounce. There is little floor support left before the confluence of QS1 (56.54), MS3 (57.00) and WS3 (57.41). This is where the next short-covering rally is most likely to start. Below these levels is a big hole in the floor down to YS2 (50.56) and it could only be visited in case of a total crash of the market.

10693

The multi-pivots outlook for GDX is once again awful, with a weak first support cluster providing little protection for the stop (53.56) to be hit. Yearly Pivot (55.19) really needs to be regained fast and serve as a launching pad for a rally. Otherwise a new entry at a limit of 50.61 just above a strong support cluster looks interesting with the very strong buy LT/ST settings of the robot.
Billy

10691

senco
10-04-2011, 08:11 AM
Billy, if the GDX stop is hit today, and then the secondary entry (50.61) - will the 'formal' robot issue a primary long entry at the open tomorrow? If so, will the stop level to be tracked be appropriate to this secondary entry? ... I am trying to determine whether to use the secondary entry in case the bottom falls off today.

Pascal
10-04-2011, 08:15 AM
Billy, if the GDX stop is hit today, and then the secondary entry (50.61) - will the 'formal' robot issue a primary long entry at the open tomorrow? If so, will the stop level to be tracked be appropriate to this secondary entry? ... I am trying to determine whether to use the secondary entry in case the bottom falls off today.

If the GDX stop is hit today, the GDX Robot will be in cash for one trading day.
This is because GDX works on a reversal mean of large movements. When it hits a stop, this means that there is probably more to go in the same direction and hence the robot waits one day for things to clear up.

Pascal