Covering IWM – January 5, 2011

As a reminder, the IWM and GDX cluster files are now automatically updated on the robot pages.

Under the surface, the 20 DMF was pretty strong during what looked like a day for nothing. With the OB/OS closing above 30, the fail-safe neutral signal triggered and the IWM robot will cover its short position at the open because it found no statistical edges for holding it into a neutral signal.

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The main reason for the lack of edge in the short trade is a low ATR which has a bullish bias. This is confirmed by a low VIX level for many days in a row. Interestingly, the CBOE future implied correlation index broke all supports yesterday, which indicates that if hedge funds may not be buying yet, they are increasingly de-hedging their long positions in more individual stocks and become more selective. Clearly fear of an overall market collapse is starting to wane.

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I must leave for important external appointments and will post an updated chart for GDX later today. Nothing is changed for the GDX position and outlook.
Billy

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Here is the promised GDX chart.
Billy

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