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Confusion Only For the Latecomers! July 8, 2011
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Before I forget, make sure to study the stunning Bob’s post about pivots and market environments in the “Price Action” thread of his E-mini forum yesterday. It couldn’t be timelier.
The daily stages score is now at its critical positive threshold but with another huge divergence from the indices prices. It is on its resistance downtrend line.
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The daily stages structure has pushed a massive majority of stocks into accumulation stage, usually preceding a strong mark-up stage. I hope we will be able to witness what a “strong” mark-up stage following such a “super strong” accumulation will look like.
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We all know that much will depend today on the reaction/follow-through/reversal or not reversal after the job report will become public.
The IWM robot is not much concerned with this news and even less with predicting its outcome! It has raised its trailing stop (83.17) above the day’s optimal long entry buy point (83.06). This suggests that buying today at the limit buy entry is probably not the best course of action. But it is so far away anyhow, that it won’t likely happen in one day.
The only reason the limit buy entry price remains at 83.06 is because IWM closed below YR1 (85.68) by a few pennies. A close above YR1 would actually have given the green light to buy today up to 86.12. This is quite confusing and that’s why we cannot stress enough the importance of entering at once on an initial robot signal change.
Backtesting proved that the best money is made at the market turns, provided you can pinpoint them with a high probability, and a positive mathematical expectation of success, like the robot does. Most market players try to play the trend in the middle, which has as much credibility as the pure Buy and Hold approach.
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GDX still has to prove its ability to decisively break above SPP and QPP (56.61), but the close above the 50-day moving average (55.55) is a positive sign. Here too, if you entered at the initial long position from the robot, your trade is evolving nicely with the growing strong first support cluster and the rising trailing stop.
Billy
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I still don't understand GDX
I am having a problem understanding why the GDX robot is willing to take so much risk and is basically disregarding the confluence support area in protecting the capital of the owner of this security. At closing of $56.25, the robot is willing to sell stop the shares at 6.58% below the close in the context that ATR% is 2.56% which is almost a 3 standard deviation event. This makes no sense to me and does not appear prudent at all. Again, the implicit Expected return appears to be around 18.4% but I, as a prudent trader would not be willing to wait for the stop to be hit on this trade. And it has nothing to do with emotions...!
Pierre
SPY and/or QQQ occasionally would be nice
[QUOTE=Billy;14455]Pierre & all,
Let me know if the GDX cluster chart and commentary are a distraction....
...
.. Just give me some feedback on this.
Billy[/QUOTE]
Billy,
I consider your daily commentary as a "market awareness" comment and therefore I would also see a lot of value if and when you added other markets from time to time when you feel there is something we must be aware of in terms of S/R clusters. The SPY and QQQQ come to mind as for me they illustrate another "quasi independant" section of the market of different interest to the main IWM sector or Large, Tech, Small Cap.
Pierre
P.S.: Our time is precious and something that keeps bugging me is these posts with long quotes at the [COLOR="red"][SIZE="3"]end[/SIZE][/COLOR] of the message which reappear every single time...! Would it be possible to stop that practice which I feel is a distraction. Now I feel better [lol]
