End of Quarter - September 30, 2011

[Billy]

Forum Clusters 110930.xlsx

Simulation of new weekly, monthly and quarterly pivots levels for next Monday doesn’t provide any significant floor pressure changes for next week, month and quarter! Is it foreshadowing more of the same choppy consolidation until the end of the year? At least the robot statistics lean currently strongly to the short side and until we have an oversold reading of the 20 DMF that could pave the way to a new buy signal, the edge remains in the hands of short-sellers.

Since the market bottom of March 2009, 8 of the final days of the 10 quarters have been down days. I think it is significant that yesterday’s low for IWM was coinciding with YS1 (64.40), a stable floor level that won’t be changed next week. The same happened for SPY at its Semester S3. I expect this same low to be respected by market makers if today is a down day. The bigger move may start next week after a seasonally bullish biased Monday and once the new floor levels will be fixed and known by all algorithms.



As you know, the GDX robot ST/LT settings are very reliable in backtesting, while multi-pivots guidance is much erratic. Here we have a fantastic strong buy opportunity from the robot statitics, but an awful multi-pivot picture. All important floor supports have been broken this week, including stable ones like the yearly pivot (55.19), Semester pivot (56.61) and the 200-day moving average (58.35). There is no stable floor support left before SS1 (49.08). But the average investor in GDX never cares much about these levels since he is driven by hope, greed and fear, not by risk management.
Billy