EOD GDX vs. RT GDX MF - February 24, 2012

On top of Pascal’s comments on the GDX RT MF and the robot, I would like to add some technical observations:

• Thursday’s intraday plunge happened at a long term downtrend resistance line starting from 09/21/11 with a negative RS divergence to SPY (lower indicator on the 2-day chart below). Although the rejection is very mild so far, it happened with an impressive reversal in the GDX MF. This may have occurred in anticipation of NEM’s earnings expected today and in case of a disappointment, we could experience a logical pullback down to the uptrend support line starting from 12/31/11 near the trailing stop that was raised to 53.82. This would also imply a retest of the 50-day moving average currently at 54.09.


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• But the intraday pullback was also very well contained by the 200-day moving average (57.03) topping two extremely strong floor support clusters. Technically, everything is in place for a continuing LT uptrend from here if the GDX MF strengthens again today.

• The ATR fell back down to a “bullish” level of 2.51% after dropping the huge daily true range bar of 01/25/12 from the 20-day window. All daily ranges have been in “bullish” mode since then, therefore barring any new huge daily true range bar, volatility is set to help the bulls more than the bears. It is certainly premature to short aggressively.

• In conclusion, I tend to prefer following the EOD robot signals from here and to wait for a confirmed close of the GDX MF below 1.35% before exiting the unleveraged long position. But I have exited my leveraged positions at the intraday sell signal from the GDX MF yesterday. The low ATR and cluster strengths are discouraging me from shorting before further confirmations. No edges can be found for entering secondary positions.
Billy

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The ATR threshold today for triggering a short signal is 2.58%. With an ATR of 2.51%, NO SHORT SIGNAL could be issued today, only a sell long positions signal.
Billy

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I find the volume differentials very interesting. Of the three times the down trend line has been touched by price, yesterday's was the only instance on higher and, in fact, increasing accumulation volume. This would seem to bode well for GDX. If gold opens lower today, GDX may pull back some. I will only exit on sure signal from the robot or Pascal and Billy.

Billy, please let me know how you configure ATR on daily charts.

Many thanks,

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I find the volume differentials very interesting. Of the three times the down trend line has been touched by price, yesterday's was the only instance on higher and, in fact, increasing accumulation volume. This would seem to bode well for GDX. If gold opens lower today, GDX may pull back some. I will only exit on sure signal from the robot or Pascal and Billy.

Billy, please let me know how you configure ATR on daily charts.

Many thanks,[/QUOTE]

Nickola,
ATR is normally a standard indicator in most trading platforms. But our settings are 20-day, with exponential moving average of true ranges and divided by the closes to express a percentage indicator.
I never could set it up on my own worden daily charts. But I keep track of the spreadsheets.
Billy

Hi, does anyone have a ToS study for the RS divergence to SPY, that they would share? Thanks.