Missing Catalyst - December 14, 2011

[Billy]

Forum Clusters 111214.xlsx

Sorry for the shorter and delayed posting, but I unexpectedly had to help a cousin in emergency situation this morning and couldn’t complete my normal routine.

I wouldn’t dare to say that Santa Ben is actually Satan Ben, but it is clear that the FOMC announcement missed delivering the catalyst that could have morphed an improving market structure and consolidation into a new rally.
IWM is now on the brink of a steep decline if the last lines of support confluences break. These lines are Monthly pivot (72.00), Yearly pivot (71.84), 50 dma (71.66) and Quarterly pivot (71.25). If such an important cluster doesn’t attract fresh large buyers our initial robot trade is probably toasted and the trailing stop is conveniently positioned at 71.02.

An encouraging signal comes from today’s robot settings and edges which are giving the green light for a secondary long entry at a limit price of 71.96.



Talking about the brink of a precipice, it is what describes best the precarious fate of GDX if it falls down to the next support clusters. A short position was entered by the GDX robot at 55.96 and the trailing stop is at 58.77. No secondary entry for Wednesday is advised. GDX is used to overshoot the Weekly S3 (54.20) but it is indicative of a much oversold level for this week.
Billy

[ilonaross]

http://www.nytimes.com/2011/12/14/bu...l?ref=business

Read starting paragraph 9 focusing on rotating membership that may provide the missing catalyst.

[Timothy Clontz]

Hope your cousin is okay.

[Billy]

Hope your cousin is okay.

Thank you Tim, he's okay now.
Billy

[nickola.pazderic]

Hi Billy,

Hope all is well.

Can you provide some clues how one might trade the current double open Robot situation?

It is not easy. One is close to a stop out. And the other is only beginning. In fact, we are yet below the opening price if I recall correctly.

Thanks always,

[grems8544]

Can you provide some clues how one might trade the current double open Robot situation?

It is not easy. One is close to a stop out. And the other is only beginning. In fact, we are yet below the opening price if I recall correctly.

I know you intended this for Billy but let me add my two cents.

Treat each trade as a separate trade, unless you get exactly the same entries. Hence, if we hit the stop, you're out on that trade, but if we hit the entry of another signal, you're in. I set One-Triggers-Other orders so that the limit buy and the stop loss levels are automatically set when the level is attained.

Regards,

pgd

[Billy]

Nickola,
You are asking for guidance about two different TNA positions running simultaneously.
There is no double TNA open robot position possible. The robot is always 100% invested in a non-leveraged IWM position until a signal change or stopped out.
Secondary and leveraged entries are never taken by the robot and are provided as indicative edges for discretionary trades. It is your responsibility to manage your risk with secondary positions and with leveraged ETF’s.
The aim of the robot is to avoid such complex decisions. There are infinite ways to manage secondary and leveraged trades and it is impossible to provide guidance for everyone.
Novice traders should trade exactly like the robot at first and progressively develop their own discretionary style for secondary and leveraged trades with a very small portion of their capital. Experienced traders can apply more aggressively their own trading style.
As an example in choppy environments, you remember that I exited 2/3 of my initial TNA position for a small profit and would re-enter the proceeds only at a secondary active entry. I would have had to wait for today, but I would use the same stop as the one from the original robot position. All in all, it would have made it a flat positive trade instead of a losing one. But I didn’t do it because I mistakenly concluded too early that the choppiness was about to end and I went back in way too aggressively with a TNA average price of 44.73 that was stopped out today at 39.64 for a loss of -11.37%. The position was still a winner just yesterday morning. This tells you how delicate and dangerous it would be for me to provide individual guidance or coaching to all subscribers. I’d look like a genius of risk management if I had stayed in my choppiness assumptions and I actually look like a clown now with my aggressive trend-following choice.
Billy

[nickola.pazderic]

In fact, your answer provides excellent counsel.

[TraderD]

I’d look like a genius of risk management if I had stayed in my choppiness assumptions and I actually look like a clown now with my aggressive trend-following choice.
Billy

Having the robot detect choppiness (and take profits accordingly) rather than manage the position with a trend-following setup would be a useful enhancement imo.

Trader D

[nickola.pazderic]

So, with the move of IWM below the Robot stop today, the robot is entirely out of the market?

And the secondary entry is inconsequential to it?

Thanks,