GDX On Shaky Grounds – IWM Short - April 17, 2012

The IWM robot entered its short position at 80.03 with an initial stop at 81.63. That stop is located just above today’s daily R3 (81.61) and only a strong trend day through Quarterly pivot (80.28) and weekly R1 (80.92) could be a threat to the position today.

The odds are low to see strength in the near future since the 20 DMF keeps deteriorating at a fast pace, indicating that large players are maintaining their selling pressure. IWM could avoid a decisive breakdown below Monthly S1 (79.26) yesterday but it is likely to be retested soon. Below that level, there is very little floor support left before Quarterly S1 (75.90). QS1 becomes a serious target if IWM can’t recover Quarterly pivot (80.28). In this context and with bearish LT/ST robot settings, there are still good edges for entering a secondary position at the same limit of 80.03 as yesterday.

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The Precious Metals Money Flow closed exactly on the 0% line and there is now only the EOD porosity tolerance (-0.150% today) left for protecting the GDX robot to sell its position at the open tomorrow. We’ll need to see the new LT/ST settings before deciding to short or stay in cash.

The RT model will reverse to a short if the -0.150% level is hit intraday. Due to the proximity of the MF average, too many scenarios and whipsaws could develop thereafter and we’ll try to keep you updated in the forum. It’s probably best to rely on the EOD model to avoid potentially shaky intraday RT signals.

The GDX robot found enough edges to advise a secondary entry today at a limit of 46.13. With the protection level now so near, make sure that the MF is still above -0.150% when you enter the trade.

Technically, GDX relative strengths vs. SPY and GLD have now crossed back below their 63-period moving average on all timeframes from the hourly to the 5-minutes chart. This is a very negative evolution that puts into doubt the sector rotation scenario. GDX has lost all the progress it made last Thursday which looks now like a “dead cat bounce” in hindsight. But the multi-pivot outlook remains excellent with a 31:8 total strength ratio between support and resistance clusters. This should put some breaks on any aggressive selling pressure.
Billy

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[QUOTE=Billy;21857]
The Precious Metals Money Flow closed exactly on the 0% line and there is now only the EOD porosity tolerance (-0.150% today) left for protecting the GDX robot to sell its position at the open tomorrow. We’ll need to see the new LT/ST settings before deciding to short or stay in cash.

The RT model will reverse to a short if the -0.150% level is hit intraday. Due to the proximity of the MF average, too many scenarios and whipsaws could develop thereafter and we’ll try to keep you updated in the forum. It’s probably best to rely on the EOD model to avoid potentially shaky intraday RT signals.

The GDX robot found enough edges to advise a secondary entry today at a limit of 46.13. With the protection level now so near, make sure that the MF is still above -0.150% when you enter the trade.

Technically, GDX relative strengths vs. SPY and GLD have now crossed back below their 63-period moving average on all timeframes from the hourly to the 5-minutes chart. This is a very negative evolution that puts into doubt the sector rotation scenario. GDX has lost all the progress it made last Thursday which looks now like a “dead cat bounce” in hindsight. But the multi-pivot outlook remains excellent with a 31:8 total strength ratio between support and resistance clusters. This should put some breaks on any aggressive selling pressure.
Billy
[/QUOTE]

Hi Billy,

GDX RT bottomed in close proximity to the short trigger (-0.13%) and then crossed the long trigger (+0.15%). Had the short been triggered (0.02% away) and then reversed to long intraday, you'd be going short near the LOD and long at the HOD! I'm not sure what the next day brings but had this happened, I believe you'd be feeling like a total sucker today, no?

Trader D

[QUOTE=TraderD;21863]Hi Billy,

GDX RT bottomed in close proximity to the short trigger (-0.13%) and then crossed the long trigger (+0.15%). Had the short been triggered (0.02% away) and then reversed to long intraday, you'd be going short near the LOD and long at the HOD! I'm not sure what the next day brings but had this happened, I believe you'd be feeling like a total sucker today, no?

Trader D[/QUOTE]

Yes Doron, that’s why I wrote in the quoted message:
“It’s probably best to rely on the EOD model to avoid potentially shaky intraday RT signals.”
Billy

[QUOTE=Billy;21866]Yes Doron, that’s why I wrote in the quoted message:
“It’s probably best to rely on the EOD model to avoid potentially shaky intraday RT signals.”
Billy[/QUOTE]

Thanks, Billy. Looks like a replay today, except this time the short RT signal got crossed (-0.19% just before the close). If only the EOD and RT robots knew how to work together or at least tell us which one is to be trusted.

Trader D

[QUOTE=TraderD;21878]Thanks, Billy. Looks like a replay today, except this time the short RT signal got crossed (-0.19% just before the close). If only the EOD and RT robots knew how to work together or at least tell us which one is to be trusted.

Trader D[/QUOTE]

This will come over time with a growing sample of data and observations allowing for robust backtests.
In the meantime, the RT model looks like an excellent discretionary tool. Since we know the reliability of EOD signals, when a RT short signal triggers 40 minutes before the close like yesterday but is soon clearly and impressively negated by MF action heading into the close, it seems to be actually a strong secondary buy signal for the EOD model. Yesterday’s multipivot 3:1 R/R limit entry was 46.45. Even if the LT/ST settings were neutral on the previous day’s close basis, it was possible to enter (even above the limit) near 46.51 when the RT MF crossed back above the EOD porosity of -0152%, using an EOD sell signal as a stop.
Billy