Since the 20 DMF Market Direction Model missed the buy signal by a tiny porosity hair in December and stayed neutral, the IWM robot ST/LT settings have looked and will continuously look for shorting the uptrend based on a “neutral” 20 DMF MDM signal.

That’s because the IWM robot backtests have always found edges in fading strength for reversion-to-the mean trades when in a “neutral” mode. It would have been long if the buy signal triggered back in December. It is an unfortunate repeat in reverse of what happened last August when the robot continuously tried to go long against the downtrend which was also qualified as a “neutral” market by the 20 DMF MDM.

The current uptrend is further fueled by abundant available liquidity and defiance of sovereign bonds.

As we wrote on the last short signal that was stopped out today, we are now objectively forced to trigger a fail-safe stop rule for the whole IWM robot system. It is programmed to only go short under present “ neutral” 20 DMF settings and it could become a one-way road to hell. So, until we have a non-neutral signal from the 20 DMF, we will freeze the IWM robot and let it in cash whatever the ST/LT settings say.

I agree in advance with all your reactions : The market is sometimes a cruel, cruel world for mechanical systems with rigid “lines in the sand” rules. At times, it will save you from a catastrophe, but at other times it can become stubbornly stupid because of a microscopic indicator miss. We encouraged you to avoid leverage, but we cannot be confident that the IWM robot will help you improve your performance in the very near term and feel compelled to responsibly make this drastic decision.

The GDX robot is in no way concerned by this event.
Billy