Thursday, March 29, 2012

We hold a 200-share tracking position with a cost basis of 23.79.  The failure of the last rally to reach a 26.14 Hidden Pivot where we'd planned to lay out some  May calls suggests the weakness will continue, favoring a tradable low at the 22.74 target flagged her earlier. Although GDXJ is no more than $1.25 from a Hidden Pivot support where I'd suggested we should back up the truck, we'll take a disciplined approach, using a stop-loss at 23.59 even if it means having to re-establish a new long position at a higher price.  That number is four cents beneath the 'D' target of the pattern shown, and if it's hit we should infer more weakness impends. The strategy is consistent with my entrenched habit of managing risk rigorously and precisely rather than averaging down when I "know" that a bottom is not far off.

If bulls are going to reverse two days of moderate weakness, look for them to make their move near the 1392.25 midpoint pivot of the pattern shown.  Since the pivot is just a tick above an obvious structural support at 1392.00, the most effective way to trigger a low-budget liftoff would be to run stops just below the support.  Accordingly, traders should look for a camo abc rally on charts of 3-minute degree or less to get long at the pattern's point 'X'.  ________ UPDATE (11:37 a.m. EDT): An easy breach of the midpoint support has put the futures on course for a further fall to 1385.25, its 'd' sibling. You can bottom-fish there with as tight a stop-loss as you can abide. Click here for information about the upcoming Hidden Pivot webinar and a coupon good for a $50 discount.)

We caught a low nearly perfectly yesterday, but the bounce didn't last long enough to celebrate. A four-contract tracking position that kept us briefly in the game racked up a $600 gain before we exited on signs of fresh weakness via a 1669.00 stop-loss.  Moderate selling was continuing early Thursday morning, generating downside targets at 1656.00 (p) and 1645.20 (d). Both are shown in the chart, but neither is particularly appealing for bottom-fishing because of their close proximity to prior lows.

A key goal of Rick’s Picks is to offer trade set-ups that risk relatively little even when we are wrong.  This is of particular importance because our subscribers tend to be overly bearish on stocks and overly bullish on gold. Prices for the latter have been slipping for a month, and although that might discourage fair-weather buyers, it has only made our gold bugs more eager to try bottom-fishing with each new selloff. And with stock averages now entering their fourth consecutive year of stupidly rising prices, Rick’s Picks subscribers have been keener than ever to short that diabolically elusive Mother of All Tops. We tried this for the umpteenth time yesterday, buying put options just as the QQQs were topping pennies from where expected. We’ll get to that trade in a moment.  But first, let’s talk about the trade in Comex Gold, since it illustrates how one can swim against the tide, buying the dips and dives in bullion without getting hurt even when the selling turns ugly, as it all too often does. We’d put out a buy recommendation in gold futures Tuesday night that was based on some precise “Hidden Pivot” correction targets in the Comex April and June contracts.  Ordinarily, we  tell subscribers to initiate such trades using the “camouflage” entry technique they've learned at the monthly Hidden Pivot Webinar. [Click here for details and a $50 discount for the April class.] This time, however, the bearish targets looked so appealing that we sanctioned dispensing with “camouflage” and simply buying either the April or June gold contract with a five-tick stop-loss. This entailed, in the case of the April, placing a bid two ticks above a 1669.90 Hidden Pivot target and using a stop-loss a hair below it, at 1669.60.  In the actual event, the micro-tight