Thank You, Ben! - March 27,2012

[Billy]

The GDX robot covered its short position and went long at the opening price of 50.81. The initial stop is set at 47.94, just below last week’s lows. The first Money Flow protection level is 1.92 average day away from Monday’s close, 0.09% (porosity for today) below the average MF. There is no secondary position setup advised for today.

The RT GDX Model crossed below its higher 0% line minus porosity and went short intraday. As we advised in the forum yesterday, because the next protection level (same as the robot) is so near, it looks suitable to try avoiding a whipsaw and plan for a RT exit on a confirmed EOD robot exit. If the gap up was initially sold by large players and triggered the RT sell signal, Money Flow actually finished strong in the afternoon trading and I wouldn’t be surprised if the RT model will go long again intraday today at or above +0.09%.

GDX traded above daily R1 all day and it is a confirmation of a price trend follow-through to the upside. It was helped by the Bernanke speech giving an edge to the 0% yielding precious metal assets in a low interest rate environment promised for the future. According to Tom McClellan, this is happening right on time for a 13.5-month cycle bottom for gold that was due last week. The floor clusters are neutral to supportive and I think now is the time to sit on our long position and let the rest of the world discover at its own rhythm the trend reversal developing in GDX. If they leave us alone, we have comfortable protections in place.
The IWM robot remains desperately in cash.
Billy

[Billy]

The GDX RT Model already reversed back from short to long at 9:56 AM.
Both EOD and RT models are now long.
Billy

[Pascal]

The GDX RT Model already reversed back from short to long at 9:56 AM.
Both EOD and RT models are now long.
Billy

It indeed did just at the open but then again at 9:56 because the porosity was slightly lower than yesterday.
We are working to have both the ATR and the porosity levels displayed on the charts.

Pascal

[Billy]

RT model back to short again!
Focus on the EOD model seems adaquate today.
Billy

[TraderD]

RT model back to short again!
Focus on the EOD model seems adaquate today.
Billy

Billy,

This bodes well with your earlier statement: "If you aim at longer term perspectives, it’s probably better to focus on the EOD robot and not to worry about its occasional divergences with the RT model which can be more “noisy” and “whipsawing”". That raises the question as to what context the RT robot should be viewed at? Maybe use the EOD robot near zero crosses but RT robot near extremes (OB/OS)?

Trader D

[Billy]

Billy,

This bodes well with your earlier statement: "If you aim at longer term perspectives, it’s probably better to focus on the EOD robot and not to worry about its occasional divergences with the RT model which can be more “noisy” and “whipsawing”". That raises the question as to what context the RT robot should be viewed at? Maybe use the EOD robot near zero crosses but RT robot near extremes (OB/OS)?

Trader D

The only reliable backtesting at our disposal is the EOD model. Therefore, it should serve as our main strategic reference.

In my view, the context that matters the most is the next EOD protection signal. If the RT model is ahead of the EOD model like now and gives intraday signals that have no importance whatsoever with the EOD signals, it is just a warning that the EOD trade may become soon in jeopardy, but not yet.

It is only when the intraday RT signals happen at the same protection level than the EOD protection level (currently average MF-porosity) and it becomes obvious that the day will close with a new EOD signal that I would use the RT signal for anticipating the EOD move.

If ever we have a strong MF this afternoon and it closes the day above 0% + porosity, then both the EOD and RT models will use the same protection at 0% - porosity. If we have a new RT short (or cash) signal at 0% -porosity the next day, then I would take the RT signal much more seriously because it could lead to an EOD exit by the robot.
Another observation in the current context is that ATR is one hair away from the limit ATR allowing for shorting instead of staying in cash. This tells us that those RT intraday short signals don’t have much power to back them up.
Billy