Thursday’s rally faded early in the session, missing my supposedly in-the-bag target at 44.75 by 36 cents. Traders using a ‘dynamic’ trailing stop, as I frequently advise, would have exited long positions at 44.37 on the pullback. The disappointing price action has not diminished the odds that the 46.10 Hidden Pivot rally target shown in the chart (inset) will be achieved. A ‘mechanical’ buy on a retracement to p=42.55 is indicated, but if the implied 41.36 stop-loss is too scary, use the entry signal to set up a ‘camouflage’ trade. Because the 46.10 target is coincident with another, lesser target at 46.00, we should expect double stopping power. Accordingly, I’ll recommend to traders who have caught a piece of the rally to short in the range 46.00-46.10 aggressively, applying a third of any profits made on the way up to a generous stop-loss. ______ UPDATE (April 28, 10:44 p.m. ET): The bullish target that kept us on the right side of crude from well below these levels served equally well as a place to get short today. The intraday high at 46.14 gave way to a moderate decline to 45.57 that would have allowed a trader short from 46.10 to take a partial profit of as much as $520 per contract before the bell. You’re on your own now, but I’d suggest keeping at least a small portion of any short position for a swing at the fences. A stop-loss at 46.10 should be used, however, since anything above it would all but guarantee 46.25 or higher. _______ UPDATE (May 1, 9:52 p.m.): The futures got by my 46.10 rally target on day two Friday, although not by much. Because the intraday high at 46.78 was so fleeting and the reversal so nasty, it should be regarded as a possible bull trap, which would be bearish. If bulls are about to turn things around, the upward reversal from the 45.55 midpoint Hidden Pivot shown (see inset, a new chart) must continue. Otherwise, look for more weakness to 44.98 on Monday. _______ UPDATE (May 3, 12;51 a.m.): The futures dove sharply after trapping bulls with a head-fake on Monday’s opening bar. The selloff was bearishly impulsive on the hourly chart, but price action is too gnarly at the moment for me to offer you a one-size-fits-all trade the night before. If 45.16 isn’t exceeded first, a short from 44.92 (see inset, a new chart) seems likely to reach p=44.68, but that’s hardly enough to make it worth the risk.
