December 2011

A midpoint pivot at 27.010 flagged here earlier beckons as a minimum downside objective, but it could also provide a staging platform for a reversal of the bear cycle begun from 43.510 in early September.  This Hidden Pivot support can be bottom-fished provided you are able to initiate the trade via camouflage so that entry risk does not exceed $70 theoretical.  In practice, this will probably entail using patterns visible on charts of 10-minute degree or lower.

We already know the bad news -- that the futures appear likely to fall to at least 1459.40, or to 1424.80 if any lower -- so let's shift our focus to some bullish alternatives just to keep an open mind.  For starters, the good guys could retake control of the 30-minute chart with a thrust over the next 2-3 days exceeding 1635.20, a small peak made Wednesday on the way down.  However, a more subtle signal -- view it as an early alert -- would be generated with a print today at 1590.20. Depending on how the rally from Thursday afternoon's low plays out, a pullback from just above that number could create a low-risk entry spot for camouflageurs.  I've sketched out this possibility on the accompanying chart. _______ UPDATE (3:45 a.m. EST):  A pattern much like the one I sketched -- with single-bar coordinates at points A and C -- tripped an entry signal at 1588.20 at around 12:20 a.m. (A=1585.60 at 10:30 p.m., B=1592.10, and C=1586.50). Half of a four-contract position would have been exited at the 1589.80 midpoint of the pattern, and a third contract at 1593.00, the D target of the pattern. Imputing theoretical gains of 6.40 to the contract that remains yields an effective cost basis of 1581.80.  For now, use a stop-loss at 1579.70, a few ticks below the 'd' target of a minor, corrective ABC that was playing out at around 3:45 a.m. If the futures turn and go higher without triggering the stop, use a 3.20-trailing stop above 1601.00.  We're not swinging for the fence on this one, but we are going for extra bases. _______ EXIT UPDATE 11:05 a.m. EST):  The futures spiked to a high of 1603.50 at 7:35 a.m., and so we exited at 1599.50 when they detumesced. The

We hold two January 54-51 puts spreads for a debit of 0.07 and two January 53-50 puts spreads for a debit of 0.03.  We're using a 52.13 downside target for now, but the Cubes would need to go lower before we think about taking off the position for a quick profit.  As noted here earlier, total risk is limited in theory to $20 plus commissions,  but we could make as much as $1200 if things go our way. Effectively, we have gotten 60-to-1 odds on the QQQs trading 50 or lower by January 20.

We hold two contracts with an 1178.00 cost basis that has been adjusted to reflect paper gains on half the position already exited. Continue to use a stop-loss at 1205.75, but close out one of the contracts if 1222.00 is reached first. (Note: This is lower than the number originally given.)  If the order fills, stop yourself out of the single contract that would remain if the futures create a bearish impulse leg on the 30-minute chart.  As we went to press Thursday night, the futures appeared bound for a Hidden Pivot at 1222.25, predicated on a decisive push through the 1215.00 midpoint sibling of that number. If 1222.25 is exceeded by more than four ticks, however, it would portend more upside on Friday to as high as 1230.25. _______ UPDATE (3:56 a.m. EST):  We exited a third contract two ticks off the so-far overnight high, dodging a subsequent 6.50-point pullback in the process, when the futures spiked to exactly 1222.50 at around 2:25 a.m. Imputing theoretical gains so far to our remaining contract gives it a cost basis of 1156.00. At a current price of 1218.50, that implies a paper gain so far of $3100 per contract. Set a 1207.75 stop-loss for now, but switch to a 4.00-point trailing stop above 1227.00

[Our recent offer of three $1000 scholarships to the January 11-12 Hidden Pivot Webinar brought a deluge of applications – more than 100 so far. The deadline was originally set for December 29, but we’re moving it forward to this Sunday, 11:59 p.m. so that we can provide a decision to you as soon as possible. Click here to nominate yourself or anyone else whom you think could benefit from the intensive, individualized mentoring that will be given to the scholarship winners. One recent graduate of the Hidden Pivot Webinar had this to say: “I will never look at charts the same way again. I have made back the cost of the course many times over both from trades taken, and just as important, from trades I stayed away from.” For those who have already taken the course or who plan to take it, there are some significant benefits.  Read about them below in the message from my wife, Marilyn, who is administering this first-time-ever offer. RA] Attention all Hidden Pivot Webinar graduates! We have some special benefits for you coming up in January. As you may know, Rick has offered our first-ever scholarships for three seats in the January 11-12 webinar.  His goal is to take three unlikely candidates and turn them into traders. How is he going to do that? And, what’s in it for you? For the next three months, Rick will be taking these three students through a thorough program to turn them into traders. This will include weekly online sessions with the students and special classes devoted to helping them achieve mastery of the Hidden Pivot Method. You can sit in on these interactive sessions, too. You will be able to refresh your knowledge and skill-set and get even more real-time guidance – directly from

Visually obscure subtleties are what we look for during these Wednesday sessions, since they are our most useful tool in identifying trading opportunities that will subject us to relatively little risk or stress. We found some excellent examples during this session while stalking possible trades in the E-Mini S&P and February Gold. We also got a chance to ponder a potentially tradable low in the QQQs just moments after we had “locked in” a nearly riskless vertical bear spread by shorting some January 51 puts against January 54 puts we had bought earlier.

We've been using a 28.425 target to keep us on the right side of this move, but I'm going to shift our focus lower, to the 27.010 'p' midpoint pivot of a bearish pattern that looks more compelling to me (see inset).  Indeed, the pivot is so well situated that if Feb Gold had not smashed through its equivalent support, I'd infer that Silver is fixing to lead the next important turnaround. As things stand, it's probably no better than a 2-to-1 bet, since Gold's downtrend is so well developed. Regardless, camouflageurs can try bottom fishing near 'p', but keep in mind that other traders will be playing for a bounce from the whole number 27.000.  You can also try it at 28.425 as originally suggested, but don't risk more than $70 on the initial stop.

A 1459.40 target identified here earlier might not be the  worst of it, at least for this bear cycle, since it is tied to a one-off point A. Using the highest 'A' on the chart, 1925.10, yields a somewhat lower target at 1424.80. The pattern, as you can see for yourself, is too clear and compelling to produce a 'D' target that does not provide a tradable bounce. However, as is our practice, we'll wait and see what happens at the support before we infer that even lower prices are likely.  And, as always, we'll remain open to the possibility of a bullish turn from somewhere above the projected low.  The first place a meaningful reversal might be signaled is via the creation of a bullish impulse leg on the hourly chart. Let's raise the bar a bit, though, and use the 240-minute chart to be sure. In that time frame, it would take a rally to 1681.80 to give bulls a fighting chance.

We doted on the 1198.00 target during yesterday's tutorial session, licking our chops at the prospect of getting in at a trampoline bottom. Alas, fatigued sellers were unable to push this pup any lower than 1202.50.  The downside target is still valid, as is another less promising one at 1199.75, but bottom-fishing is recommended only for those who are camouflage-equipped. If you're not but desperate to do something, anything, you can try bidding 1195.25 with a 1.00-point stop-loss.  That's the lowest target I can extrapolate from the 15-minute chart (see inset). _______ UPDATE (9:17 a.m. EST): I'm establishing a tracking position, since the 1198.00 target nailed the exact low of this so-far 20-point rally. Also, a couple of chat-roomers who work the graveyard shift evidently initiated positions at the low. Assuming four contracts purchased, cash out half of them here for around 1218.00.  That will give us an effective cost basis of 1178.00 for the two contracts that remain. Tie them to a 1205.75 stop-loss for now, o-c-o with an order to sell one contract at 1226.00. Hitting the low to the exact tick was a simple parlor trick that you can learn in a month. Click here if you think you're ready to try.