Dividends, Dichotomy or Rotation? - December 22, 2011

[Billy]

Forum Clusters 111222.xlsx

Yesterday was another strong afternoon for the 20 DMF and cumulative TICK with some bullish divergence at the close. Without a follow-through into a clear uptrend, IWM is now much overbought within its recent sideways trading range.




There was dichotomy between accumulation in the NYSE stocks and distribution in the NASDAQ stocks. So far, it looks like portfolio rotation with a neutral impact on net accumulation/distribution. Besides the ORCL contagion, this may signal the start of illegal (who cares anyway and where are the cops?) window-dressing.



All odds, probabilities and edges remain on the shorting side. Today’s pre-market and early trading might be quite shaky when looking at the long list of expected news between 8:30 and 10:00am.



IWM will be trading ex-dividend ( -0.36 $) today. Backtesting has shown that the robot doesn’t need to adjust its trailing stop for dividends.

IWM stalled at Weekly R1 (74.38) which was also in confluence with Daily R1 yesterday. Today’s Daily R1 is at 74.79 or just one cent under the robot stop of 74.80. The same rule as yesterday will apply : if the robot is stopped out, it will stay in cash overnight. The suggested new short entry limit at 75.24 is for discretionary trades only. If the stop is not hit, there are 2 fail-safe stops ready to trigger in the 20 DMF Model (see today’s Pascal commentary).



The Precious Metals Sector Money Flow triggered a buy signal and the GDX robot will cover its short position and enter a new long position at the open today. The initial stop will be 8.2% below the actual entry price, so size your position according to your risk tolerance, especially if trading the triple leverage NUGT ETF. GDX will be trading ex-dividend (0.61$) on Friday 12/23 so expect a quick dividend as a bonus on the trade. Please read Pascal’s GDX comments for details of the signal.
Billy