GDX and IWM Cluster Strengths for June 6, 2011

[mklein9]

Back on Tuesday last week (May 31) before the latest drop started, I had made my own preliminary calculation of the IWM robot's likely entry price and came up with 84.94. This used the 50MA and SR1 at 85.46.

Once the robot's numbers were published and showed an entry of 85.10, I scratched my head a bit and found that the robot was using YR1 at 85.68 instead of SR1, leading to a higher entry price even though SR1 is certainly a strong pivot. So I put in my order at 85.13 and, of course, it never got filled. Had I gone to bed and left an order at my presumed entry price, it would have filled and I would be about 20% richer now :-). So of course I have analyzed this case a bit.

I know the details of the entry/exit price calculations are proprietary, and I know deeply the advantages of testing a consistent methodology as opposed to reacting to one-time events. But I would be interested in any analysis of "why did the robot choose YR1 instead of SR1" if that is possible. I just seemed a bit counter to my expectations, especially that SR1 is such a strong pivot level that should be able to form a resistance level on its own.

Thanks,

-Mike