Quote Originally Posted by shawn_molodow View Post
Hi Billy,

I have been pondering this sentence and sense there is an important learning in here that I am not fully understanding.

You wrote this AM:

"The progression was calibrated to provide growing support and diminishing resistance within ATR bands each and every day without exception."

I understand what ATR means, and I think I understand that the MM's helped move the price of GDX above higher and higher strong/important resistance levels over the last few days; but what did you mean by "within ATR bands." I looked at ATR(20) on freestockcharts.com, and see ATR(20) from Jul 7 as 1.42, 1.39, 1.39, 1.43 and 1.50; and based on closing price.. calculate the ATR(20)% as: 2.52%, 2.47%, 2.50%, 2.49%, and 2.53% - Is this the ATR band? Are you saying that MM's moved to the next major pivot level when it was within the ATR(20)%?

Thanks,

Shawn
Shawn,
The accumulation campaign algorithms do spread the large desired positions buying by adapting to daily volatility (ATR%) and liquidity.
Let’s suppose that you’re a large market maker and you want to buy 10,000,000 shares of GDX both for your own inventory and for some of your large institutional clients. That’s about a full daily average volume. Let’s say that your liquidity algorithms tell you that it’s okay to spread the buying over 10 trading days. Then your accumulation algorithms will program an average daily buying of 1,000,000 shares at the best VWAP for the full 10,000,000 shares position.
The last thing you want to see when your accumulation campaign is over is that the VWAP of your full position is higher than the actual GDX 10-day VWAP. The optimal way to proceed for the algorithms is to start the initial buying under heavy resistances when GDX weakness is maximal and to buy in the lower range of the ATR% each day. Since you’re a large buyer, you’re de facto the creator of new strengthening support areas within the multi-timeframe pivots. Your algorithms will continue to buy each day in the lower ATR% range and support areas will strengthen day after day attracting other buyers on these supports. When your accumulation is over, momentum is already building up significantly and the 10-day VWAP of your full position is now considerably lower than the actual GDX 10-day VWAP. You are sitting on huge potential profits.
The term “ATR bands” is not perfect, but that’s what I found best when writing my commentary.
Billy