Webinar

We must always be on the lookout for subtle technical signs on the long-term charts, since they can provide important clues concerning the temperament of a bull or bear market. It is on the monthly chart of the Dow Industrials that we looked for and found small details with potentially large significance. Has this summer’s 2200-point crash in the Dow marked a resumption of the secular bear? This session provides some illuminating details that bear directly on that question.

This session provided us with a front row seat to yet another dramatic day on Wall Street. The broad averages had been swinging wildly for two weeks, and on this particular day the Dow was down about 400 points after rallying 600 points the day before. Surprisingly, though, there were no bullish impulse legs to be found on the hourly chart, giving us reason to consider why stocks were likely to head lower. We spent the remainder of the session looking at December Gold, which resumed its furious rally as we watched in real time. This held little surprise or suspense for us, though, since we “knew” exactly where the rally was headed: to 1810.70, a middling Hidden Pivot resistance.

A feisty Silver Wheaton got nearly all of the attention during this session, since we hold a partial butterfly spread in the stock. One more trade is needed to complete the position, and once we’ve shorted some September 46 calls against what we already hold, we’ll have a virtually riskless bet on SLW’s continuing rise into early autumn. We also looked at the stock as a possible trade in real time, since it was stealing up on an opening-bar peak that obviously had trapped many bulls (and short-covering bears).

Congressional wrangling over the debt limit has made the markets jittery lately, providing us with an excellent opportunity to look for day trades in a more or less trendless flux. We spent time on the intraday charts of the E-Mini S&Ps, then segued to the Dollar Index, which was in the throes of a steep rally. A highlight of the session was a detailed explanation of the bullish butterfly spread in Silver Wheaton that we'd been attempting to leg on as the stock swung wildly from ebullience to despair.

The emphasis during this session was on spotting camouflage opportunities and steering clear of traps in real-time charts for Gold, Silver, Corn and the E-Mini S&Ps. Although it will nearly always be possible to force a long or short trade in some time frame, we can reduce stress and effort by initiating trades only when they are based on impulse legs that conform strictly to our rules. In particular, we should expect to find the best – and easiest – trades at swing highs and lows that have been signaled on charts of higher degree. In all instances, finding the first such signal amidst the panic, fear and uncertainty of others will afford the most trouble-free path to success.

Because the day’s touts had anticipated explosive moves in Silver and Gold that were in fact occurring, we took extra time to scrutinize the charts of both. Silver in particular was on a rampage, having exceeded the extremely bullish target I’d provided by five cents. Owing to the “chopped liver rule,” this had bullish implications going forward, and we explored several ways in which they might be tradable. To round out the session, we also pondered gold and the E-Mini S&Ps. The latter was in the throes of a 17.00-point surge that missed a touted target at 1328.75 by a single point.

Bullion’s retracement from the May 2 peak has now dragged on for more than two months, providing not only the usual tedium of bull market corrections, but also some lows that may have evoked despair in more than a few investors. It is at such times that we should put aside “feelings,” and focus solely on our mechanical indicators, since they have yet to signal any real trouble -- only the kind that is intended to shake loose the timid and the impatient. It is with the foregoing in mind that this session focused intensively on Comex Gold and Silver futures in the throes of their first promising rally in a while.

The k-A segment – bane of the Hidden Pivot novice but ultimately of little concern in most trading or forecasting – gets a workout in this session, since we stumbled on several instances in which the “window calculation” was not only useful but necessary. There is also a segment delving into the failure of gold and silver to generate bullish impulse legs on the lesser charts since the correction began from early May’s highs.

We spent much of this session belaboring the soon-to-be-mistaken notion that the broad averages were headed higher. In fact, stocks were bound for collapse the next day, notwithstanding the fact that the E-Mini S&Ps had generated a very powerful bullish impulse leg a day earlier. The lesson here is that it’s okay to trust your gut feelings, but always to verify them by monitoring impulse legs on the lesser charts. In this case, a signal to get short was triggered on the 5-minute chart just five points off the high of a very nasty selloff. Not all went awry for us, incidentally. The reiteration of a bearish call on crude, for one, in the face of a sharp rally was borne out by a plunge in prices the next day.