Wednesday, February 1, 2012

Bears are given the edge in Wednesday's tout for the E-Mini S&P, and if they prevail it could spell a 200-point fall for the Dow Industrials. Even so, I've highlighted a minor midpoint support that could be used by night owls to speculate against this picture of weakness.

Bears have the edge right now in a duel of impulse legs that project, respectively, to either 1283.75 (p=1300.50) if lower; or to 1323.75 (p=1313.00) if higher. A rally exceeding 1313.00 overnight would give bulls a fighting chance, but regardless, he best spot for night owls to attempt bottom-fishing would be at the 1303.25 midpoint support of the pattern shown. A stop-loss as tight as two ticks (!) could be used for this gambit. Want to learn how to find these entry spots yourself?  Click here for information about the upcoming Hidden Pivot Webinar.

The provenance of a 1771.50 target that I said was a lay-up in today's commentary is shown in the accompanying chart. The hourly bars are bearish at the moment, but the impulsive retracement  could potentially yield a place to try bottom-fishing at the 1732.20 midpoint of the pattern A=1750.60, B=1727.00, C=1744.00.  I would expect a tradable bounce from that number, and a precise one, but it should nonetheless be bought via camouflage using the 'x' entry trigger of a minute a-b-c rally.

Although we’d be thrilled to be able to brag a year from now that a trade we recently advised in Natural Gas futures caught a bear-market low within two cents, we’re not prepared to bet the farm on it. Similarly, a winning gold trade that got stopped out earlier in the week may have caused us to miss a moon shot, but we’re not about to look back. For when all is said and done, we’d rather not be prayerfully holding our breath or losing sleep as gold in particular swoons, leaps, caroms and careens its way higher. Aggravation and stress aside, on a simple risk:reward basis there is never justification for buy-and-hold speculation. Yeah, we’ve heard the story about the commodity whiz who made $50 million riding a brahma bull in soybeans/cattle futures/crude oil all the way to the top. But the guy couldn’t possibly have made all of that money without experiencing devastating setbacks along the way. And he could not have kept doubling down on subsequent trades without giving it all back. In our book, it is slowly but surely that wins the race, and the massage we preach to subscribers and students who take the Hidden Pivot Course is to never risk more than $1 to make $3. This applies along the entire route of a trade, from entry to exit. Moreover, we recommend that positions be constantly  “worked” so that s trader’s hard-won gains will not be entirely and constantly at risk. How does that advice relate to the chart above?  To begin with, when we advised buying eight gold contracts in two places below current levels, we “knew” exactly how much we stood to make on the trade because our proprietary technical indicators said a 1771.50 target would be reached come hell or high