Webinar

During this session, we considered the underlying psychology of price patterns on various gold charts. Although we routinely use Hidden Pivots to trade, they are indispensible for understanding price action at a deeper level.. The ability to “read” stocks is a skill that some students may not even know they possess. Recall how the Karate Kid unknowingly built up his muscles painting fences and waxing cars. He didn’t know he had those muscles until he began to use them for karate. Similarly, as we become increasingly skillful at the mechanical task of finding Hidden Pivots, we subconsciously improve our ability to read the markets with discipline and detachment. This in turn can help bring us to a fundamental understanding of its basic rhythms – which is to say, its psychology.

The emphasis was heavily on camouflage, particularly when trading opportunities come from one’s ability to act quickly. Usually, camouflaged entry opportunities begin with visually subtle ABC patterns. Sometimes, however, a pattern unfolds almost too quickly to catch, making it “subtle” in another way. Such low-risk opportunities will be available only to those who are not just alert, but very quick on the draw. In this lesson, we pored over charts for gold, natural gas and the E-Mini S&Ps to find stress-free entry points with-the-trend. As is the case with all camouflage forays, the goal was to find trades that would show at least a small profit even if we were wrong about the trend.

You’ll find this session especially useful if you want to quickly review the key elements of camouflage trades. We covered the basics, which call for entering trades at Lindsay’s point ‘X’, but only when several elements unique to the Hidden Pivot Method are present, to wit: 1) an impulse leg that has surpassed at least one internal and one external peak; 2) a one-off A; 3) Single-bar a-b-c coordinates, and 4) a b-c pullback equal to at least 0.618 of k-A. We also lingered over Gold’s short- and long-term charts, concluding that 1074.50 (basis Comex December), $30 above current levels, is in-the-bag, but that any higher would portend a minimum 1134.30.

We struck gold near the end of this session with a camouflage entry that perfectly caught a breakout in the Comex December contract. With bullion in the throes of a lackluster uptrend, we had been looking for a low-risk way to get long. Luck was with us when the one-minute chart produced a timely opportunity too juicy to pass up. Using a three-tick stop-loss to enter at point ‘X’ with the trend, we were never seriously challenged. The futures eventually surpassed the midpoint resistance and got within three ticks of the ‘D’ target. In the end, this was a great way to get long the December Comex and make a few bucks even if the futures go nowhere.

Having come to the E-Mini S&P chart 20 minutes too late to leverage the day’s best opportunity, we looked elsewhere. Crude? A decisive thumbs-down, for this is a trading vehicle that is out to tax the diligent trader’s patience to the limit. We found a high-potential opportunity in the shares of Goldman Sachs, however, and made plans to buy put options if the stock rallies a further 4% to its target at 192.91. We were also rewarded by a close look at the weekly T-Bond chart, where an unexciting bull market appears to be conserving energy for the long-haul. A slow, steady bull would be congruent with a dollar forecast that calls for weakness over the long term but not a collapse.

We lingered on the charts of Goldman Sachs, finding several good reasons to be long right now. With a little more work, we were able to come up with several ways to buy the stock without risking much. We then segued to the E-Mini S&Ps, where we identified a rally target worth shorting with a tight stop-loss. We also discussed why bears should not try to intercept this rally aggressively, since it shows no technical signs of slowing down. Finally, we took a look at Comex December Gold, discovering that the intraday high missed by just two ticks a target that had been a week in coming.

tocks were climbing steadily higher, and although a bullish target we were using for the E-Mini S&Ps implied that a strong rally was imminent, we decided it would be premature to look for a camouflaged entry opportunity. That’s because timid action on the lesser charts hinted of tedium for at least a few more hours. Even so, we found a way to play the move, if and when it occurs, by using call options in the Diamonds. Specifically, we considered calendar-spreading an out-of-the-money strike. The discussion of this strategy was a digression of sorts but well worth your attention, since we have seldom discussed the leveraging of options in such detail during the weekly class.

Gold was screaming, the E-Minis were on the move, and although "camouflage" opportunities in each had come and gone, we examined their respective intraday charts closely to see whether there might have been an easy way in. We found that bullion's takeoff had been too abrupt to board, and in the E-Mini, although there had been several ways to get long, the larger patterns promised little follow-through. We ended the session on an interesting note, however, buying a 9.89 downside target in UNG that had been drum-rolled and many days in coming.

It was an excruciatingly dull day on Wall Street, but we still managed to find things to do, even if it required hunkering down on the tick chart of the E-Mini S&P. We took a good look at gold, but as a trade rather than as an obsession or a hobby; and we looked even more closely at UNG, the natural gas ETF, to determine whether its bear market was truly bottomless. Even if that is the case, there are likely to be two terrific opportunities to bottom-fish on the way down.