April 23rd, 2014
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A Sane Way to Trade Crazy Markets

by Rick Ackerman on December 19, 2011 12:01 am GMT · 21 comments

Does the chart below of the Dow Industrial Average make you feel bullish? Bearish? Neutral?  We’re not sure ourselves. Although we’ve been using technical analysis for nearly 40 years, the chart doesn’t speak to us. At best, it leaves us with only a moderately bullish bias for the near term  – and a vague feeling that the meaningless price swings that have ruled the markets in 2011 could continue for longer than we would care to imagine, let alone explain  This is hard to believe, especially with so many dreadnoughts bearing down on the global economy and banking system. The U.S. is re-entering a recession that never ended for most households. China has hit the brakes in preparation for a slowdown in global trade, and the country’s real estate bubble appears to be deflating with a vengeance. Jihadists are planning naval “maneuvers” in the Strait of Hormuz. Bird flu and the bubbling Yellowstone caldera threaten us with extinction.

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TODAY'S ACTION for Monday

Sunday Night Softness

by Rick Ackerman on December 19, 2011 12:01 am GMT

Stocks and bullion were soft Sunday night in turgid action, so I’ve emphasized mildly bearish possibilities in my touts for index futures and bullion.


Rick's Picks for Monday
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ESH12 – March E-Mini S&P (Last:1206.75)

by Rick Ackerman on December 19, 2011 2:34 am GMT

March E-Mini S&P (ESH12) price chart with targetsWe are long a single contract with a cost basis of 1156.00. The 17-point drop from Friday’s high missed our 1207.75 stop-loss by two ticks, but be prepared to exit on that number Sunday night. That would give us a gain worth a little more than $2500 on paper.  ______ UPDATE (7:29 p.m. EST): The futures touched the stop moments ago, so we’ll move to the sidelines. It’s always hard to tell about these Sunday night shakedowns, but we’ll avoid this one since both ‘p’ (1206.00 ) and ‘D’ 1197.75 coincide with previous lows that are likely to entice the riff-raff into bottom-fishing.  However, if the futures get away from the dirtballs who are maneuvering them lower at this moment, they could plummet to 1179.00. That’s a Hidden Pivot you can bottom-fish either with camouflage or an 1179.25 bid, stop 1178.25.  Its ‘p’ sibling lies at 1202.00, but bidding there is suggested only for those able to employ camouflage. If an order fills there via a picture perfect ‘camo’ reversal, I’ll establish a tracking position of four contracts for your further guidance. _______ FURTHER GUIDANCE (11:12 a.m. EST): We initiated a long position at 1206.00 following a perfect ‘camo’ pattern off an overnight bottom at 1201.75. On the 10-minute chart, the abc coordinates — all single-bar! — lay, respectively, at 1201.75, 1207.75 and 1204.50.  Two contracts were to have been exited at the 1207.50 ‘p’ midpoint, and a third at d=1210.50. This gave us a profit-adjusted cost basis of 1198.50 for the contract that remained. It was exited minutes ago at 1210.75, based on the bearish impulse leg created via a dip beneath the 1211.00 ‘external’ low recorded on the way up at 4:10 a.m. Our theoretical paper profit for each four-lot entered was $600. It would seem that in a trendless market that has been serving up crap for…months, that nailing tradable intraday swings in this vehicle is as easy as shooting fish in a barrel.

SPY – S&P (Equity) (Last:121.58)

by Rick Ackerman on December 19, 2011 2:46 am GMT

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SIH12 – March Silver (Last:29.460)

by Rick Ackerman on December 19, 2011 3:16 am GMT

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$ESM14 – June E-Mini S&P (Last:1874.00)

by Rick Ackerman on April 23, 2014 3:24 am GMT

The leaps have been opportunistic, powered by short-covering whenever the mood is right. Most of the time these days, however, the futures are taking mincing steps in both directions, creating a challenging environment for profit-seekers in the middle hours of the day. One thing to notice, however, is that the rallies, particularly in this vehicle, and whether weak or powerful, seldom proceed from the first signaled entry point.  Instead, the ‘money trades’ launch from a second or third point-C lows of ABCD patterns, and they do it with such repetitious reliability that one can practically discard the first signaled entry opportunities routinely. This is the kind of price action we might expect when ‘everyone’ thinks that stocks will move higher on a given day. ‘Everyone’ can be right, but that doesn’t necessarily mean they can make money easily. For your interest today, I am including a chart that shows a modest rally target at 1895.00. I’m guessing it will be easier to get short there with a tight stop than to get long for the ride to it. However, because the futures will be in record territory at that point, we shouldn’t want to impede their progress too aggressively.

$PCLN – Priceline (Last:1230.18)

by Rick Ackerman on April 22, 2014 4:00 am GMT

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Since March 20, when GDXJ was trading for around $40, I have been looking for a potentially important low at 34.00.  More recently, I revised that target to exactly 33.76, a ‘Hidden Pivot support’. Yesterday it came within a single penny of nailing the exact low of a vicious swoon. The low may or may not prove to be the last gasp of a correction that has been in progress for the last five weeks, but it stood to be an opportune place to try bottom-fishing.  In that regard, quite a few subscribers reported getting aboard at or near the low, and so I’ve established a tracking position for their further guidance. It consists of 200 shares with a cost basis of 33.58. The price takes into account an initial purchase of 400 shares for 33.79, then the taking of a partial profit on half the position at 34.00.  The bounce so far has hit 34.90, meaning GDXJ has trampolined $1.14 cents since hitting my three-week-old target.  For now, traders should stop themselves out of the position if GDXJ breaches two prior lows on the 5-minute chart without an upward correction.  As of this moment, that would imply placing the stop at 34.37 (and remember: it must be exceeded by an unbroken, downtrending leg).  You should also offer a round lot (or half of the remaining position, whichever is greater) to close for 36.80, good-till-canceled. _______ UPDATE (11:38 p.m. ET): The herky-jerky spasms in the first 90 minutes altered our stop-loss so that it would have taken a 34.07 print to stop us out — 23 cents beneath the actual low. I’ll now suggest raising the bar by using an impulse leg-based stop-loss on the 30-minute chart. That would imply a fall today touching 34.29.  Please note, however, that the stop could change if zig-zag action early in the session creates any distinctive new lows on the intraday charts. Our target for the next profit-taking interval is still 36.80.

$DXY – NYBOT Dollar Index (Last:79.89)

by Rick Ackerman on April 21, 2014 5:25 am GMT

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$USM14 – June T-Bond (Last:134^01)

by Rick Ackerman on April 2, 2014 3:21 am GMT

We don’t pay much attention to this vehicle other than at key turning points, but the short-term pattern shown looks like a lay-up for traders who see futures contracts as no more than bouncing dots on a chart, waiting to be exploited. There are actually two trade possibilities here: 1) a ‘camouflage’ short as USM slips below the 132^13 midpoint; 2) and a very tightly stopped long from within a tick or two of the 131^17 target. Good luck!  Please report any fills in the chat room so that I can establish a tracking position for your further guidance. ______ UPDATE (3:17 p.m. ET): The short was tricky to initiate, but once aboard, your reward came quickly with a drop to a so-far low at  131^26. As noted above, the short should be covered and reversed near 131^17. ______ UPDATE (April 6, 3:57 p.m.): The low of Friday’s violent price swings was 131^21 — not quite close enough to have gotten you long easily. Although this could prove to be an important low for the short- to intermediate term, under the circumstances I’ll assume no subscribers were filled. _______ UPDATE (April 11, 1:03 a.m.): Next important stop on the way higher: 135^17. _______ UPDATE (April 20, 11:10 p.m. ET): Last week’s fleeting stab to 135^10 came within less than a quarter-point of my target — close enough for us to consider it fulfilled. It took the futures more than a month to get there, so we should expect this correction-or-worse to last for at least a week or so before bulls attempt to push T-Bonds to new recovery highs.


This Just In... for Monday

Our good friends at Auerbach & Grayson are out with a storm warning for stocks and other risky assets in the first quarter.  The dollar, on the other hand, is in a strong primary bull trend that should see significantly higher valuations in the months ahead, according to Richard Ross, A&G’s global technical strategist.  Click here for the full 27-page report.


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The Hidden Pivot Webinar is two-day event is designed to teach you the risk-averse trading strategies Rick has taken to his seminars around the world. Once you have learned his proprietary secrets, you will approach trading and investing with enough confidence to make your own decisions without having to rely on the advice of others. The next Webinar will take place on May 21-22, 2014. For more information, or to register, click here.