GDX and IWM Clusters for June 7, 2011

[Pascal]

For GDX, today will be a tie-break between the first support and resistance clusters, each with strength of 12. Yearly pivot (55.10) will be critical to monitor as it is the first major protection of our new short entry at 54.98. The initial stop at 58.46 is strongly protected by the huge second resistance cluster with strength of 26. The most probable 3-day short target of 53.38 is at the lower end of the first support cluster, suggesting a continuation to the downside would be relatively easy from there.

Attachment 8649

For IWM, the path of least resistance is clearly upwards and only daily levels (not shown) are hindering a bounce to our 81.18 short entry level. Support strength is now sturdy enough compared to resistance for a one-day-only bullish bias. The initial stop (83.03) of a possible new short position is well protected by the strong second resistance cluster. Billy

Attachment 8650

I would like to add the following comment on IWM: Since the 20DMF is now in oversold territory, we might have a buy signal at the close of today (or tomorrow). In such a condition, a bounce could trigger a short position by the robot. If we have a 20DMF buy signal by the close, the robot will cover its short at the close. However, if we do not have a 20DMF buy signal by the close, then we might fall lower tomorrow and in such a case, selling at target (QSI of 79.32) is advisable. This strategy (selling at target when in oversold territory) was back-tested (last week,) but is not programmed in the IWM robot.

[adam ali]

Pascal,

I have a simple question that may have been answered (many times) previous. In your note, you mention that if the Robot goes short today, it will close its position if the 20DMF gives a buy signal. Yet, in reviewing the backtests for both the Robot and 20DMF signals I see times when they are contrary to each other.

Does the Robot already trade in sync with the 20DMF signal? If not, why would it necessarily close today's short position if the 20DMF gives a buy signal?

Thanks.

[Pascal]

Pascal,

I have a simple question that may have been answered (many times) previous. In your note, you mention that if the Robot goes short today, it will close its position if the 20DMF gives a buy signal. Yet, in reviewing the backtests for both the Robot and 20DMF signals I see times when they are contrary to each other.

Does the Robot already trade in sync with the 20DMF signal? If not, why would it necessarily close today's short position if the 20DMF gives a buy signal?

Thanks.

This is a good question. In fact, the Robot is not "in sync" with the 20DMF, since the 20DMF is only one of the parameters. But, I noted that today's short settings are very weak. We can see that both the LT and ST settings have been steadily climbing. This means that when the 20DMF sends a buy signal, this will easily push the setting into positive edge. If no buy signal is issued, the settings will still climb higher I believe, but more slowly.





Pascal

[Artur]

Hi,

If I'm not mistaken, yesterday GDX Robot was in a BUY mode and also as a position (entry price 54.31 on 5/12/2011) and SL at 54.34.
Yesterday's low was 54.62, so today that position shoud be active.

Today the robot is in Short mode and looking for a short position at 54.98 (should be there already).

Am I missing something? Where is the former position?

Thanks in advance.
AT