No Official New Positions - April 30, 2012

Although there is no advised position from the GDX robot, the Precious Metals MF stays positive at +0.19% and both the RT and EOD models are in a buy mode and protected by the 0% - porosity level. Today’s porosity is 0.122%.

The most important development for the model is the falling volatility, with the ATR% down at 2.29%, the lowest reading since 3/21/2012 or 27 trading days ago. That level is statistically too low for providing an edge on the short side. It means that, even if the RT model triggers a sell signal today, it will stay in cash and avoid shorting. This has bullish implications for the near future unless volatility starts rising strongly again (like it did back in March).

After two trading days above the broken 2-month old downtrend resistance line, the multi-pivot outlook is very bullish too with total support strength of 29 vs. total resistance strength of 6 on a 2-day horizon. A simulation for next month’s monthly pivots that will be active tomorrow shows no significant difference. Therefore, I am discretionarily a buyer of GDX at the 3:1 reward/risk limit entry of 46.28 (1.15% below Friday’s close) that would equates a filling of Friday’s gap.

I will enter with 2/3 of my maximal position size and use an EOD stop with a close below Quarterly S1 (45.75). I currently plan to add the last third of my position next month if and when GDX will be trading above the new monthly pivot expected to be around 47.25.

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With the 20 DMF closing at – 0.037% or just a hair from a computation error and from another potential whipsaw, we decided to freeze the IWM robot for today and wait for Pascal’s backtest results on the gap study of the 20 DMF. The robot is officially staying in cash today.

Discretionarily, I tend to be a buyer today of a small position at a 3:1 reward/risk limit entry of 82.18, slightly above the strong first support cluster and slightly below Friday’s close. The first resistance cluster is weak and should allow for an orderly advance of IWM this week up to Weekly R2 (85.29), barring surprise news. I will use an EOD stop with a close below Weekly pivot (81.07) because this would negate the multi-pivot bullish bias for this week.

Simulation for the new monthly pivots presents no significant expected changes in the multi-pivot outlook for tomorrow.
Billy

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This morning's 10:00 am low (45.71) was both a successful retest of QS1 (45.75) and of the old downtrend line.
If that low is not decisively broken later today, this could mark the start of a sustained uptrend.
PM MF is flat for such a down day, another positive development.
Billy

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The 5-day VWAP (blue line), or the average price paid by buyers over 1week sits also right at QS1 = 45.75.
This is another important support at that level and why I keep my discretionary stop with a daily close below QS1.
Billy

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After the late morning pullback, there is now a tentative uptrend support line emerging.
This could serve as a trailing stop reference.
The PM MF seems to be reversing strongly and heading for new highs since the last pullback.
Billy
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billy,

very helpful to see your play-by-play logic. thanks for posting these.

lisa