Webinar

Our continuing search for some finer nuances of Hidden Pivotry led us to this day's intensive examination of the charts of April Gold and the March E-Mini S&Ps. Although we found no compelling reason to trade either at the time, this conclusion was buttressed by thoughtful analysis of 'dueling' impulse legs that were everywhere to be found. Our expectation of further tedium was borne out when stocks and bullion finished the day with a sleep-inducing performance that proved unworthy of our diligent attention.

Gold was getting whacked on this particular morning after head-faking early in the session. We placed our bets on a projected bottom at 1729.00, and, lo, the futures rallied nicely from 1729.10. Although we had to drill down to the tick chart to find a ‘camo’ opportunity to get long at the bullish turning point we’d anticipated, the trade came a cropper when it failed by a couple of ticks to reach the midpoint pivot. Even so, the 1729.10 low held for more than an hour-and-a-half, validating our approach if not a bullish outlook for the remainder of the day.

Gold was moving higher, although not so energetically that we might have expected a 1771.50 target to be reached. Even so, there were enough technical reasons to support a bullish outlook for the near term, and we examined them in detail during this session. We also lingered on the lesser charts of the E-Mini S&Ps, concluding – correctly, as it turned out -- that the ferocious rally begun at the opening bell was nearly spent.

Poring over the charts of bullion and the E-Mini S&Ps, we stalked a few trades but found no promising camouflage triggers to exploit. We also took a close look at Apple’s (AAPL) charts, finding things to like, although perhaps no longer to love; and at the charts of Research In Motion (RIMM), which could fall to as low as 5.67 from a current price of about 16.

We confirmed a bullish outlook for stocks with a close look at charts for the Industrial Average and the E-Mini S&P. We also looked at ways to force trades when the pickings are slim. Usually, this entails zooming down to a small enough time frame to find ABC patterns suitable for our purposes. Finally, we considered some specific reasons why the odds are heavily stacked against retail customers who would attempt to trade puts and calls. From a risk:reward standpoint, unless you’re capable of nailing swing highs and lows consistently, you’ll get a better bet at a $2 parimutuel window.

March Silver was in a moderate uptrend when we looked in on it, creating a subtle camouflage opportunity that looked too juicy to pass up. We initiated the trade – several students in the room later reported making money on it – for reasons that are made clear in this recording. The entry risk of $325 was five times what we would ordinarily have wagered on a single Silver contract, but you can judge for yourself whether this was the right call. Subsequently, Silver sank like a stone after taking a fleeting leap above the ‘p’ midpoint. This posed little problem, however, since we’d had a chance to take a partial profit at ‘p’ and a further 20 minutes to exit the rest of our position before the futures fell to our break-even price. And that is the beauty of camouflage – the ability to make money on a trade even when we are ‘wrong’.

Mr. Market provided us with an opportunity to short the E-Mini S&P using a ‘camouflage’ pattern on the one-minute bar chart. Although time ran out before we could profitably exit the third of four contracts initially sold, at the end of the hour the trade was just two ticks from a ‘D’ downside target worth $360 in theoretical gains. In addition, we would still be short a single contract with a chance to let our profits run. There is some detailed psychologizing in this lesson, since the futures took their sweet old time doing what we’d expected them to do.

If you need convincing that our proprietary "camouflage" tactics can very nearly eliminate the stress and dollar risk of trading such vehicles as Comex gold and silver contracts, this lesson is a must. Because bullion futures had triggered bull trades the previous night, we dissected the opportunities this had presented with great care. The effort paid off with some of the subtlest details we’ve uncovered to date in our ongoing effort to improve “camo” trading results.

Visually obscure subtleties are what we look for during these Wednesday sessions, since they are our most useful tool in identifying trading opportunities that will subject us to relatively little risk or stress. We found some excellent examples during this session while stalking possible trades in the E-Mini S&P and February Gold. We also got a chance to ponder a potentially tradable low in the QQQs just moments after we had “locked in” a nearly riskless vertical bear spread by shorting some January 51 puts against January 54 puts we had bought earlier.