Thursday, December 11, 2014

We initiate trades using small patterns, camouflage-style, because the big ones carry more risk. The goal is not to make a pile of money on the small patterns, but to get aboard with relatively little risk or stress. You can see the thought process at work in this recording, since we spent most of the session hunkering down on charts of one-minute degree or less. This is where trades start to work very consistently, mainly because there is relatively little competition. If you’ve been getting stopped out too often shortly after entering a trade, this lesson shows how to avoid it by paying attention to small details that are off nearly everyone else’s radar.

With stocks trending strongly, most of the Hidden Pivot targets for the issues tracked below were bulls-eyes, several of them dead-center. I've updated nearly all of the touts so that you can judge for yourself whether the information provided would have been tradable, based on your personal style.  Subscribers reported particular success with a bear put spread in JP Morgan, which we legged on at no cost after nailing the high on Monday of the stock's crazed rally.

The 2018.25 target is not lacking in clarity, and I expect it to be reached Thursday night or earlu Friday morning. The shorting opportunity would necessarily come first, but there's also a the prospect of bottom-fishing when the target is reached. I'll make the short trade catch-as-catch-can, although my gut feeling is that the futures will not do much faking out before they descend to the target. For the expected reversal, place your bid at 2018.50, stop 2017.50.  You'll be on your own if it fills, but if the trade goes in-the-black be sure to take a partial profit at 2021.50, or to implement an 'impulsive' stop-loss there if you hold just a single contract.  _______ UPDATE (10:26 a.m.): Concerning this morning's Whoopee Cushion short-squeeze, although the 2018.25 target is still valid theoretically because C=2060.75 has not been exceeded, the target has little practical value (other than that its having informed us, but not having been reached overnight, that conditions had turned mildly bullish.) That said, the rally has yet to exceed any 'external' peaks, so technically speaking it is not yet even impulsive on the hourly chart. This bull market's lack of significant corrections is at such an extreme that you could describe it as freakish, historically speaking. It routinely spits on Hindenburg Omens, as you will have noticed by now. Today is a good reminder of why we should take at least a partial profit on any put position that shows a small gain -- and not distract ourselves by patting ourselves on the back in those rare instances when a short has "come home."

Yesterday's plunge was a rare delight, both exhilarating and unexpected. In recent years, we have seldom seen stocks fall for three consecutive days, and that's why the weakness came as a surprise. Admit it: It feels right as rain when stocks are falling, since the bull market begun in 2009 is a creature of loose monetary policy rather than of economic growth.  From a technical standpoint, it is ever-so-mildly bullish that the downtrend did not quite reach the 17478 target shown, let alone the somewhat lower alternative target at 17447. My hunch is that this will happen overnight, and we can track it by monitoring the E-Mini Dow futures. The corresponding targets for this vehicle are 17478 and 17450, and the second should be considered in play if the first is exceeded by more than five points. Either can be bottom-fished with a stop-loss as tight as 4 points. If the lower target is easily exceeded, however, it would imply that more selling impends. ______ UPDATE (December 12, 1:58 a.m.): Thursday's strong opening-hour rally fizzled with an afternoon sell-off that left a gratuitous hump on the intraday charts. It projects to 17528, or to 17457 if any lower, with 17389 a worst-case target for the day. ______ UPDATE (3:20 p.m.): The Indoos ratcheted down to a 17357 low in the early going, exceeding my worst-case target for today. This has bearish implications going foward. At the moment, however, price action has gone tediously sideways for nearly four hours. _______ UPDATE (December 14, 10:12 p.m.): I missed an obvious target when I gave 17389 as a worst-case low for Friday. As you can see in the new chart, the low occurred just a hair from an easily calculated Hidden Pivot at 17275.  This implies the selling may have run its course,