Back To Neutral – August 30, 2011

[Billy]

Forum Clusters 110830.xlsx

After yesterday’s big gains, the IWM robot found no edge for entering a new position today. The trailing stop on the initial position was raised to 66.19 or 2.62% below the entry price of 67.97. This is the residual worst case risk on the position. As a reminder, after the last backtest runs, we don’t enter new positions on a neutral signal anymore, but the initial position is held.

The floor levels are suggesting that some consolidation centered around the yearly pivot (71.84) is needed for digestion before a decisive assault at QS2 (72.70). A decisive break today below WR1 (71.41) and daily S1 (70.80) would create the risk of an attempt at filling yesterday’s gap. As much as yesterday’s gains were easy in the absence of serious floor resistances, a fall in the same zone could be as easy without serious floor supports! We’ll need to see where large buyers would step in to evaluate their appetite.

With 19.56% or more gains on TNA from the initial entry, here may be a good place to reduce your position size temporarily while the signal remains neutral.



The GDX robot settings remain as neutral as ever. There is still a lot of hesitancy around SR1 and QR1 (62.12) which should serve as a launching pad for the next run up. A higher high than 64.05 made on August 22 becomes a necessity for a technical confirmation of the uptrend.
Billy