GDX and IWM Cluster Strengths for June 6, 2011

[slgerritz]

In the IWM Robot Page "Management of existing positions" sections it states that the position was covered on 5/27/2011. It further says that the robot is currently looking for a short position. This seems clear; however in the "Settings for new positions" section it states that there is a short enty recommendation at $81.18 for the trade day following 6/3/2011. If I covered per the robot do I then assume the $81.18 is the new robot short signal and that the robot is no longer searching for a new short position?

Additionally, in the "These are the probabilities for combine long term / short term setting:: section it states that "Today's SHORT setting are Neutral". Does this reference the $81.18 new position price?

And the last question for now: Is the same page I wil view after subscribing to the new robot and what time of day will it be updated?
Steve

[grems8544]

If I covered per the robot do I then assume the $81.18 is the new robot buy signal and it is no longer searching for a short position?
Steve

$81.18 is the new robot buy signal for Monday, June 6th.

The robot, since it is NOT in the position, is still searching. It's a terminology issue; the target entry is 81.18 on the SHORT side, e.g., "sell short" to enter.

Regards,

pgd

[slgerritz]

$81.18 is the new robot buy signal for Monday, June 6th.

The robot, since it is NOT in the position, is still searching. It's a terminology issue; the target entry is 81.18 on the SHORT side, e.g., "sell short" to enter.

Regards,

pgd

Thanks Paul - Here's another question.

The "These are the probabilities for the combined Long term / Short term settings:" section is as follows:

Today's SHORT settings are NEUTRAL.
The LT algo found a short edge of -1.25%. This is lower than the -0.75% limit
The ST algo found a relatively weak negative edge of -1.59%
The LT edge is more positive than -2%. In the past this combination led to a 3D short LOSS of -0.11% from the previous day's close. The trade became positive after three days in 53.1% of the cases.

It appears that the more negative the number --- the more positive the return potential. Am I reading this correctly? Also is a NEUTRAL for the short setting saying that I do not have very good odds at making a gain. How does the built-in Multi Pivot 1/3 risk return ratio factor in to the robot signals?

[Pascal]

Thanks Paul - Here's another question.

The "These are the probabilities for the combined Long term / Short term settings:" section is as follows:

Today's SHORT settings are NEUTRAL.
The LT algo found a short edge of -1.25%. This is lower than the -0.75% limit
The ST algo found a relatively weak negative edge of -1.59%
The LT edge is more positive than -2%. In the past this combination led to a 3D short LOSS of -0.11% from the previous day's close. The trade became positive after three days in 53.1% of the cases.

It appears that the more negative the number --- the more positive the return potential. Am I reading this correctly? Also is a NEUTRAL for the short setting saying that I do not have very good odds at making a gain. How does the built-in Multi Pivot 1/3 risk return ratio factor in to the robot signals?

The LT and ST edges are measured by comparing both Short and Long settings. The more negative the edge, the stronger a short position will be. The Multi-Pivots 1/3 RR ratio is one of the elements in the decision process.



Pascal

[grems8544]

It appears that the more negative the number --- the more positive the return potential. Am I reading this correctly?

If we are looking for a short entry, then yes, your interpretation is correct.

Also is a NEUTRAL for the short setting saying that I do not have very good odds at making a gain.

My interpretation is that your chances of winning the position are less than if the signal is showing a STRONG short setting. It can still work in your favor, BUT, review the FAQ, specifically the charts that show the R/R as you move further from the original entry signal. The graphs clearly show that days since signal result in lower gains ....

How does the built-in Multi Pivot 1/3 risk return ratio factor in to the robot signals?

I have to defer this to the masters ... I can't clearly answer this from my study of individual FAQs.

[slgerritz]

If we are looking for a short entry, then yes, your interpretation is correct.



My interpretation is that your chances of winning the position are less than if the signal is showing a STRONG short setting. It can still work in your favor, BUT, review the FAQ, specifically the charts that show the R/R as you move further from the original entry signal. The graphs clearly show that days since signal result in lower gains ....

I have to defer this to the masters ... I can't clearly answer this from my study of individual FAQs.

Thanks Paul. I feel like I'm on a role now, so maybe I can get away with one more question for now.

The 20 DMF chart has given a short signal. It uses the S&P 500 as part of the graph. Do I use this chart to either buy,cover or short the the S&P 500 (broad market) or can I assume it should be viewed as factor when trading the leader list? I will save my upcoming ETF questions for latter.
Thank ahead of time.
Steve

[brrim]

Billy; The MS1 of 81.46 and QS1 of 79.32 seem based on the MPP from May and the QPP of the 1st quarter.
Do you switch to June prices and prices from the 2nd quarter only on 7/1?

Best regards,
Robert

[nickola.pazderic]

Billy--

I think the analysis is fascinating. Until I joined this group I added daily support, resistance, and pivot points to my intra day 5-min chart of the SPY. I used these points to organize some day trading. I would find these everyday on the Prodigio trading platform at Think or Swim. I would also mark up my IWM charts in a similar manner.

I wish to know: Do you publish the daily, weekly and quarterly pivots? I'd like to mark up my weekly and monthly charts similarly.

If this question has been covered previously, my apologies.

In any case, thank you very much for your efforts,

[Billy]

Billy; The MS1 of 81.46 and QS1 of 79.32 seem based on the MPP from May and the QPP of the 1st quarter.
Do you switch to June prices and prices from the 2nd quarter only on 7/1?

Best regards,
Robert

Robert,

Sure. The pivot and floor levels are always derived from the previous period close. We still need the full data from June trading close both for new monthly, quarterly and semester levels, so they will change on 7/1.
It is precisely such changes that allow progressive shifts of support/resistance clusters strengths over time leading to more or less hinderance to price progress. Near the end of any period, one can "cheat" and project the next period levels for some foresight. This exercise is most important at mid-year deadlines and I will comment on this in due time. Billy

[Billy]

Thanks Paul. I feel like I'm on a role now, so maybe I can get away with one more question for now.

The 20 DMF chart has given a short signal. It uses the S&P 500 as part of the graph. Do I use this chart to either buy,cover or short the the S&P 500 (broad market) or can I assume it should be viewed as factor when trading the leader list? I will save my upcoming ETF questions for latter.
Thank ahead of time.
Steve

Steve,

You may review the 20 DMF methodology. The 20 DMF is not computed with the 500 components of S&P 500, but with over 1,000 stocks from all sectors. The 20 DMF signal is not derived proportionally to the signals from all stocks, but is proportional to the signals from all sectors. Hence, the S&P 500 chart is shown as a reference only for the behavior of large (institutional) cap stocks in relation with the 20 DMF, but the 20 DMF is a much more general market signal. When it is in short mode like now, it tells you to favor short setups over long setups for most instruments and stocks. It tells you a lot about timing, but nothing about the setups and their risks.

What the IWM robot does with a 20 DMF short signal is to automatically look for entering a short position but only with an optimal setup for risk management and with the best statistically expected returns. The optimal entry price is always based on a 3:1 reward-risk ratio from the multi-pivot method. On average, this 3:1 RR method returns 0% risk-adjusted returns in a trendless market. But when a trend bias is identified by the 20 DMF and/or the satistics and we use the same 3:1 reward-risk entry setups, we can achieve the exceptional risk-adjusted returns described in the introductory robot paper.
Paul answered perfectly all your other questions. Thank you Paul!
Billy