Tuesday, December 9, 2014

I've flagged bullish trades in Gold and the E-Mini S&Ps that could work for night owls, so check 'em out if you're in a time zone that can take advantage. Australians might see the gold trade trigger around dinner time. If so, it would be an excellent way to get aboard for a potential rally of larger degree.

Gold futures behaved encouragingly well yesterday. For one, the correction off Friday's high reversed precisely at a midpoint Hidden Pivot support rather than going all the way to the 'D' target.  And for two, the reversal was strong enough to create a bullish impulse leg on the hourly chart. The subsequent pullback was well under way Monday night, and my gut feeling is that we'll be able to get long for any follow-through in the conventional way -- i.e., by entering at 'X'. The signal would be tripped at 1204.00 if the point C' low of the pattern at 1199.50 survives. You should use a timed buy-stop entry in any case, implying that you get long at X but stay long for just a minute or two, until you can determine whether lift-off will be quick and relatively stress-free.  Thereafter, your immediate goal would be to take a partial profit at p (1208.40 at the moment). _______ UPDATE (10:14 a.m.): The trade worked beautifully, tripping the 1204.00 buy signal at 2:00 a.m. The first thrust went precisely to p=1208.40, the a subsequent pullback provided running room to the 1217.30 D target.  Keep in mind that this was a 'camouflage' trade with much more potential -- to 1265.70, actually. That's the D target, on the 30-minute chart, of A=1141.70 (11/30); B= 1221.00  (12/1); and C= 1186.40 (12/5).

Night owls can try bottom-fishing at the 2053.00 midpoint support, but I'll suggest bringing the bid down by two ticks, to 2052.50, for a more conservative play. This Hidden Pivot looks likely to be hit overnight, but regardless, if it gives way easily you should assume more weakness to at least 2042.75 impends. _______ UPDATE (10:33 a.m. EST): The futures signaled more weakness overnight when they breached the 1253.00 midpoint support by 3.50 points. The downtrend took a small bounce off 2042.75 before heading still lower, to a low-of-the day current price of 2034.25._______ UPDATE (7:42 p.m.): A stall at the 2059.50 midpoint pivot shown has validated the pattern itself, implying that any progress above it could be expected to reach a minimum 2068.00. As always, an easy move through a pivot would imply that the trend is likely to continue. _________ UPDATE (3:03 p..m.):  Ahhh, that rarest of delights! The stock market is falling for a third straight day -- getting its ass kicked at the moment, with the Dow down 280 points. My target is 17,447, implying about 75 more points of slippage over the near-term. Equivalent target for the E-Mini S&P is 2018.25.

We've been focused on a 58.45 Hidden Pivot target since crude was trading near $80, and it remains my minimum downside projection as well as a place to try bottom-fishing with a tight stop or the 'camouflage' technique.  However, the target is not chiseled in stone, and if crude were to breach it by more than 30 or 40 cents, I'd infer that the 55.43 target of the lesser pattern shown is in play.  Early Monday night, its midpoint sibling at 62.49 appeared to be holding, suggesting an opportunity from the long side for nimble night owls.  If you get long at or near this number, I suggest holding risk:reward constant at 1:3 ratio, based on the width of your initial stop-loss. _____ UPDATE (10:29 a.m. EST):  The overnight low was 62.25, just 24 cents from the midpoint pivot flagged above. Longs from that number could have caught a very profitable and painless ride, since the futures subsequently popped to 64.20 (!). _______ UPDATE (December 10, 9:13): Next tradable stop on the way down: 60.49. _______ UPDATE (5:45 p.m.): The 60.49 target came within 12 cents of nailing Wednesday's low. If you were able to get long, the initial rally could have been worth as much as $990 per contract, since the futures surged to 61.60 within an hour. ______ UPDATE (December 13, 2:06 a.m.): Yesterday's selling brought the futures down to within 35 cents of the 58.45 target noted above -- the midpoint Hidden Pivot support of a very long-term downtrend. Odds favor a strong bounce from these levels, but if the January contract should close for two consecutive days beneath the pivot, the 55.43 target of the lesser downtrend also noted above would be the next logical stop.