Very Strong Sell Signal - September 22, 2011

[Billy]

Forum Clusters 110922.xlsx

The IWM robot is back with a VERY STRONG short signal for today, with a limit entry (66.88) not far from yesterday’s close but apparently far above the expected gap down for today’s open.
Pre-market is currently testing YS1 (64.40) at the border of the first support cluster. If “panic” selling continues, WS3 (62.26) may be hit today or tomorrow. But YS1 should normally trigger at least some short-covering and buy programs, so a tentative gap-fill after the open is most likely and IWM could hit the robot’s limit entry price.

The trailing stop (70.74) is now below the initial entry (70.81). It is the robot’s first very strong short signal just below QS3 and SS3. That’s clearly the most bearish omen for the overall market.



No special comment for GDX today. A secondary buy opportunity at 63.25 is just neutral once again. I won’t worry much for the robot’s position above SR1 and QR1 (62.12).
Billy

[roberto.giusto]

Billy and Pascal,

congratulations on both robots, they make an almost perfect "blend"!

One question on today's new suggested strong short trade: why is the stop loss level for this one being below the trailed stop level of the "official" one?

I normally see that any new suggested trade, after the official has opened, has a "worse" stop loss level than the trailed one in the case that the trade is being profitable.

I would have expected to see the opposite: maybe it already happened in the past, but this time it jumped to my eye being this trade a strong one.

Just trying to understand the "algo" reasons, I'm perfectly fine with the stops choices.

Thanks again to both of you,


Roberto

[nikac]

First hello, this is my first post here, so I hope it won't be a blunder :-)

My dilemma is this: if dollar index is going up (and it appears it is), then isn't it a normal thing for the commodities to go down? Among them gold and gold related stocks, of course. The GDX robot is still in the buy or neutral mode but should we expect that gold miners are also going to be heading south if the dollar apreciates further?

Thx for the answer.

[manucastle]

First hello, this is my first post here, so I hope it won't be a blunder :-)

My dilemma is this: if dollar index is going up (and it appears it is), then isn't it a normal thing for the commodities to go down? Among them gold and gold related stocks, of course. The GDX robot is still in the buy or neutral mode but should we expect that gold miners are also going to be heading south if the dollar apreciates further?

Thx for the answer.

Pre market the price as been down to $61.00 but seems to be rebounding before the market open. Will the Robot keep its position ? We shall see.

Trev

[Timothy Clontz]

Apparently my stop limit setting didn't work correctly on TDAmeritrade. Do I kill GDX now or wait for a retracement?

Never mind -- just changed to a market and killed it.

[Billy]

First hello, this is my first post here, so I hope it won't be a blunder :-)

My dilemma is this: if dollar index is going up (and it appears it is), then isn't it a normal thing for the commodities to go down? Among them gold and gold related stocks, of course. The GDX robot is still in the buy or neutral mode but should we expect that gold miners are also going to be heading south if the dollar apreciates further?

Thx for the answer.

Welcome to the board.
The robot is not looking at macro relationships between GDX and the USD index. Correlations are far from being stable over time.
Anyway, gold miners have indeed already headed south and the GDX robot was stopped out at the open.
Billy

[Billy]

Billy and Pascal,

congratulations on both robots, they make an almost perfect "blend"!

One question on today's new suggested strong short trade: why is the stop loss level for this one being below the trailed stop level of the "official" one?

I normally see that any new suggested trade, after the official has opened, has a "worse" stop loss level than the trailed one in the case that the trade is being profitable.

I would have expected to see the opposite: maybe it already happened in the past, but this time it jumped to my eye being this trade a strong one.

Just trying to understand the "algo" reasons, I'm perfectly fine with the stops choices.

Thanks again to both of you,


Roberto

Roberto,

This is a frequent question. The difference comes from the fact that a new trade will have an INITIAL stop rule, while the old position is on a TRAILING stop rule. The robot computes the stop differently in each case, based on optimal backtests.
The fact that an initial stop of a new trade is above or below a trailing stop is also much dependent on 20 EMA ATR and it changes every day.
Billy