The small rally pattern shown projects to 1254.70, a Hidden Pivot that lies well shy of the 1279.80 target of a larger pattern we’ve been using to stay bullish — to stay awake, actually. Whipsaws, feints and predatory attacks on stops have made this vehicle off-limits to all but the nimblest day traders. How bad has it been? The futures are sitting exactly where they were ten weeks ago following a nice run-up from 1115.00.
Sideways movement since then is almost certainly a consolidation, one that projects to as high as 1346.20 (A=1110.00 on 1/28; B=1264.10 on 2/11). How will we know when the June contract is breaking out? Just stay focused on a peak at 1273.00 recorded in mid-March (on St. Patrick’s Day). Last week’s $40 rally failed by less than $1 to get past it, and that was our first hint of the weakness that has followed. Of course, we needn’t wait for a breakout above 1273.00 to get long. But as traders will have surmised, trying to board early at these levels has been most frustrating. Even using ‘mechanical’ and ‘counterintuitive’ entries designed to reduce initial risk to a minimum, we’ve experienced mostly just pain and boredom.
Regardless, the risk-control tactics of the Hidden Pivot Method still apply, and the best way to be on board for the potentially big move ahead is to jump on a smaller pattern that would be a strong rally’s launching pad. We generally seek to make a few bucks even if our timing of the big move is wrong. Yesterday, we stopped ourselves out of a long position for a very small loss. Even that trade would have produced a small gain, but for a typo in my advice about where to take a partial profit.