Confusion Only For the Latecomers! July 8, 2011

[Billy]

Forum Clusters 110708.xlsx

Before I forget, make sure to study the stunning Bob’s post about pivots and market environments in the “Price Action” thread of his E-mini forum yesterday. It couldn’t be timelier.

The daily stages score is now at its critical positive threshold but with another huge divergence from the indices prices. It is on its resistance downtrend line.



The daily stages structure has pushed a massive majority of stocks into accumulation stage, usually preceding a strong mark-up stage. I hope we will be able to witness what a “strong” mark-up stage following such a “super strong” accumulation will look like.



We all know that much will depend today on the reaction/follow-through/reversal or not reversal after the job report will become public.

The IWM robot is not much concerned with this news and even less with predicting its outcome! It has raised its trailing stop (83.17) above the day’s optimal long entry buy point (83.06). This suggests that buying today at the limit buy entry is probably not the best course of action. But it is so far away anyhow, that it won’t likely happen in one day.
The only reason the limit buy entry price remains at 83.06 is because IWM closed below YR1 (85.68) by a few pennies. A close above YR1 would actually have given the green light to buy today up to 86.12. This is quite confusing and that’s why we cannot stress enough the importance of entering at once on an initial robot signal change.

Backtesting proved that the best money is made at the market turns, provided you can pinpoint them with a high probability, and a positive mathematical expectation of success, like the robot does. Most market players try to play the trend in the middle, which has as much credibility as the pure Buy and Hold approach.



GDX still has to prove its ability to decisively break above SPP and QPP (56.61), but the close above the 50-day moving average (55.55) is a positive sign. Here too, if you entered at the initial long position from the robot, your trade is evolving nicely with the growing strong first support cluster and the rising trailing stop.
Billy