Trading the E-Mini S&Ps used to be as easy as shooting fish in a barrel, but no longer. In fact, the futures have gotten so cunning when they reverse direction that I’d all but given up on using camouflage tactics to corral them. It’s not that the turns haven’t been occurring precisely where they are supposed to — just that they haven’t been doing so with the kind of subtle abc patterns that yield easy ‘camouflage’ trading opportunities. My hunch is that this behavioral change is the result of machine trading’s growing dominance.

From our standpoint, the way around this problem turns out to have been so obvious that I failed to see it until recently. Very simply, we should go back to trading the E-Minis the old-fashioned way — i.e. without camouflage. This means putting up a bid against the minor trend, which can be scary. But we can mitigate the fear factor by being especially choosy about the kinds of patterns we trade. The one shown in the inset is a case in point. It is what I like to call ‘beautiful-ugly’, meaning that although it is not very abc-like visually — it’s pretty gnarly, actually — it meets our abc criteria perfectly, with a point ‘B’ low that has surpassed out two distinctive ‘external’ lows.

Those who were in the chat room yesterday got a taste of the near-certitude that such price patterns can inspire.  With the futures trading around 1790.00, I stated that the E-Mini was bound for a tradable low at exactly 1785.75.  (A Tradestation quirk caused me to err by two ticks, but several chat-roomers got the 1786.25 Hidden Pivot target precisely right.)  An hour later, with the futures still noodling around a few points north of the target, I posted the following: “[The E-Mini] is taking its time getting there, but it doesn’t have any choice about it. The trade desks of the world are the unwitting lackeys of Hidden Pivots.”

So it would seem.  A short while later, with about 100 minutes left in the session, the futures made their final descent to an intraday low at…1786.25.  At least one person in the room reported nailing the trade and coming away with a quick profit of $200.  This was the second day in a row that the futures bottomed exactly where we’d expected.  A cheap parlor trick, for sure, but one that anyone can learn. To reserve your seat for the upcoming Hidden Pivot/Camouflage Trading Webinar on December 11-12, or to find out more about it, click here. The early-bird special is still valid for a $560 discount.