March 2011

A 34.225 pivot identified in yesterday's tout caught the day's low within a penny-and-a-half, putting a possible winning trade within the grasp of alert camouflageurs. Price action was erratic all day, but when the trend resumes, targets at 35.740 and 36.350 should serve as inspiration for subscribers who want to take the plunge.  Night owls can try bottom-fishing the pattern shown if it develops correctly. _______ UPDATE (12:37 a.m. EST):  The futures went no lower than 34.460 before resuming their rampage, stranding our niggardly bid.  The 35.740 target identified above still obtains, but if it's exceeded by as little as three ticks, look for a short-term finishing stroke to exactly 35.875.  The sibling midpoint of that last number is 35.045, so look for a possible stall.

For your guidance, I was tracking a single-contract long position with a profit-adjusted cost basis of 1406.80.  However, the position was stopped out Wednesday afternoon at 1434.60, based on the risk-management parameters I'd advised.  The stop was predicated on the creation of a bearish impulse leg on the 15-minute chart -- a threshold that seemed reasonable if we are to let our profits run while protecting ourselves from the possibility of serious loss. In retrospect, however, I might have given this play more leeway, since we'd established an excellent entry point for a potential long-term hold. There will undoubtedly be other opportunities, so stay tuned if you're eager to jump in.  Our strategy will be to establish an initial position of four contracts, with the goal of letting at least one of them run till the cows come home. Most immediately, the futures were close to aborting a promising correction whose 1431.90 Hidden Pivot midpoint support might have suited that goal.  If the pattern develops optimally, as show, go for it with the tightest stop you can abide.  If you're camouflage-ready, I'd suggest using the technique to cut risk down to less than 0.30 per contract.

For reasons that I've detailed in today's E-Mini tout, The Mother of All Bear Rallies, aka "The Thing That Wouldn't Die," may have yet another death rattle in it.  Sure, I'm hoping like you that our QQQ short survives till, oh, 2015. But that doesn't mean we should turn our backs on DaBoyz while they torque up the broad averages for yet one more screaming-banshee thrust.

What a sorry mess yesterday's "action" was. The tired pumping did not change a bigger picture that hints of at least somewhat lower prices over the near term.  However, as we learned during yesterday's weekly tutorial session, there's a reason why bears cannot afford to be complacent at these levels.  Notice in the chart that Tuesday's high decisively exceeded the midpoint resistance of a bullish pattern that has been in motion since January 30.  What this implies is that although the futures subsequently dropped like a stone, they may be plotting a thrust to new recovery highs that could catch shorts unawares.  The  target is 1373.25, implying a rally that would be equivalent to nearly 500 Dow points.

Rick’s Picks holds a short position in the QQQs, and although we should like to imagine that it will prove to have been initiated precisely at the Mother of All Bear Rally Tops, we found reasons in the hourly E-Mini S&P chart to think we may not get so lucky. We also looked closely at Gold’s charts and came away with little doubt that prices will be moving higher over the foreseeable future. Finally, and alas, a real-time futures trade on which we risked a paltry three ticks came a cropper.

Gold and Silver futures were both in shallow pullbacks Tuesday night that could yield low-risk buyng opportunities for night owls.  Trading details, including charts, are contained in Wednesday's touts.

May Silver was in a shallow correction early Wednesday morning that suggested possible opportunity for night owls.  Try very tightly-stopped bottom-fishing at 34.405, or at 34.225 if it fails.  Both of these Hidden Pivots are shown in the accompanying chart.  The larger charts yield targets, most immediately, at 35.74 and 36.350. Their respective Hidden Pivot midpoints -- potentially useful for camouflage entires on pullbacks -- lie at 33.725 and 34.030.

Yesterday's heroic leap cleared three major peaks going back to early November, implying bulls are likely to dominate for the foreseeable future. More immediately, they have pulled back sufficiently -- to the tick, 1428.20 -- to be  considered recharged for another thrust to as high as 1458.60.  The pattern is shown in the chart, but we should allow for a larger correction of the bigger pattern also shown. As of around 1 a.m. EST, the futures were in a minor abc correction projecting to as low as 1426.00, but with reversal potential from its sibling midpoint, 1428.70.  Both of these Hidden Pivots can be bottom-fished with tight stops provided the point 'C' of the pattern, 1431.40, has not been exceeded to the upside.  The pattern can be found on the  15-minute chart, where A=1433.60 at 7:45 p.m.  _______ UPDATE (9:39 a.m. EST):  The overnight low was 1428.20, so it would have been very easy to catch a ride as suggested above.  For your guidance I'll assume four contracts were bought and that two were exited at 1433.00, midway into the move. That leaves two contracts whose cost basis is 1423.40.  We'll shoot for a minimum 1441.70 on one, using a fixed stop on both contracts for now at 1432.60. _______ FURTHER UPDATE (1:24 p.m.):  Today's modest rally topped at 1441.00, suggesting that bulls can move Gold higher even when they are just marking time. We'll assume a third contract was exited at 1440.00 on a trailing stop, effectively lowering our cost basis for the contract that remains to 1406.80. Use a stop-loss tied to the creation of a true bearish impulse leg on the 15-minute chart. As of 1:29 p.m, that would imply a print down at 1434.60.

Having handily exceeded a 100.17 target, the futures should be presumed bound for the next, 107.01; and thence, 110.90. Whether you use these Hidden Pivots to manage the risk of being long or getting short, keep in mind that even the most delicately precise price patterns in this vehicle require about 21 cents of leeway for targeting.  There are other bullish targets besides the ones given above, so you might say that all paths lead higher. _______ UPDATE (9:39 a.m. EST):  I have mentioned many times that oil trades require targeting leeway of at least 21 cents, even when the price patterns seem very precise and compelling. Since crude has topped this morning within six cents of the 107.01 rally target I'd provided, and then plummeted by $2.01, I am establishing a two-contract tracking position for you further guidance.  If you haven't done so already, take a partial profit on one contract now, with the futures trading around 104.93.  We'll carry the other with a bost basis adjusted upward to 108.80. Ties it for now to a 105.97 stop-loss, o-c-o with an order to cover at 105.05.