All about GDX this week-end.

[Billy]

Whereas volatility declined in sync in absolute terms for both IWM and GDX Friday, I wonder why the algo for GDX is so generous for new entries this monday morning. Without revealing your proprietary secrets, perhaps a special comment would be appropriate on this specific robot.

Friday, the entry price was $58.95, about a buck below the previous day closing price of $60.05 for an expected return of 19.29% (my calculation)
This monday morning, the entry price is $60.73 vs a closing price of $60.76 a 3 cents difference = just get in for a lower E(r) of 17.64%. I am trying to understand the rationale here
TY

Pierre Brodeur

Pascal: Bonne vacances; c'est bien merite...!

Pierre,
This is due to the 3:1 reward-risk ratio between the two new first clusters. The weekly range was so tight compared to the previous week that the new weekly floor levels have tightened a lot and are creating new clusters much closer to Friday’s close. This is typical cluster behavior after a consolidation. A breakout of the range can happen at any moment, and it’s too late to play the dip buying game. But both the LT/ST signal and the first support cluster are weak, so the setup is far from optimal.
Billy