E-Mini S&P

It’s late Tuesday night and index futures are wafting higher, not so much propelled by buying as made temporarily weightless by the blissful absence of volume. The E-Mini S&Ps are trading 1405.00 at the moment after having failed to head-butt their way any higher than 1402.00 earlier in the day. This suggests DaBoyz are building momentum for a short-squeeze ahead of Wednesday’s opening. They’re bound to get help when existing home sales are released, since this particular datum has quite evidently been brought to heel by Team Obama 2012.  The near certainty of a bullish housing number raises the question of whether we should want to risk impeding a possible buying stampede with the short offer we’d placed earlier at 1412.75. The answer is a qualified yes, although no longer via a straight offer at that price with the usual micro-tight stop-loss. We’d originally recommended that tactic to Rick’s Picks subscribers, along with another, more challenging, “camouflage” entry strategy that would attempt to control risk even more tightly. The latter is generally a wise course to follow in situations where the trader could get blown out of the water for the mortal sin of having followed heart and mind rather than instinct. The three are rarely aligned, especially when stocks have spent the last three years climbing a wall of worry that might have seemed insurmountable to some.  But just as paranoids can have actual enemies, cynics who think bulls must be out of their minds can sometimes be right.  Without casting aspersions on those who have been doing the buying, the cynic might also point out that rising shares have been driven less by bulls than by a tidal swell of easy money purposed to…lift asset values.  And of course, cynics married to bullion would further note that the

With GDXJ, the Junior Gold Miner ETF, closing on a downside target first broached here a while back, I've detailed a risk-averse strategy for bottom-fishing in today's touts. We'll also be looking to short the E-Mini S&Ps not far above.

We're looking to get short at or near 1412.75, a Hidden Pivot, either via camouflage (four contracts initially); or by way of a straight single-contract offer at 1412.50, stop 1413.75 (Please note that this is slightly higher than the number given here earlier).

I've drum-rolled a precise Hidden Pivot target to short in the E-Mini S&P, but for those who would prefer to use equity options, there's a detailed put-buying strategy in Monday's QQQ tout.

The potentially important target that I alluded to in today's commentary should be familiar to subscribers: 1412.75.  The chart, too, should look familiar, although it is even more compelling visually following  last week's extension of the C-D rally leg.  We'll be looking to get short near the target via camouflage, using a chart of 5-minute degree or less, but those of you who are eager to get aboard but unfamiliar with the technique can simply short 1412.50, stop 1413.25.  The latter strategy will assume a single-contract entry, but I'll track four contracts if there's an obvious fill on a 'camo' trade.

Late Sunday night, the Mini-S&Ps were butting up against a minor “Hidden Pivot” resistance at 1401.25 whose breach would suggest that yet another bullish surge lies immediately ahead. We’ve gotten so accustomed to seeing bears scramble for cover ahead of Monday morning’s opening that, in contrarian fashion, we’ve waxed increasingly cautious whenever it happens. In the current context, that means paying close attention to an E-Mini S&P  rally target not far above that has the potential to stop bulls dead in their tracks. [Click here for free access to the exact number.]  Notice that we are not guaranteeing that the Mother of All Bear Rallies is about to end. To the contrary, and as many of you will have surmised long ago, the odds will always be against those who would attempt to predict exactly when a rally that has been running more or less non-stop for years will seven-out. Even so, hope springs eternal that one of these days, U.S. stocks will lurch into realignment with darker realities rather than with the shameless propaganda requirements of an election year. In the meantime, please don’t get the idea that this kind of wishful thinking on our part is just sour grapes.  In fact, we were long and bullish on the E-Mini S&Ps as recently as last week after a trade triggered during one of our regular weekly online tutorial sessions. Over the short period we held the position, the futures didn’t get very far.  However, a modest rally allowed us to exit with a small paper profit, and we planned – still plan --- to reverse ourselves via a short if the futures hit the “magic number” alluded to above.  That number, as noted, is a “Hidden Pivot” as determined by our proprietary forecasting method, and it looks sufficiently compelling

We bought the E-Mini S&P futures during this session, so it could be an especially illuminating one if you want to see a ‘camouflage’ trading opportunity rationalized in real time. There are also some finely nuanced observations concerning certain uses of the k-A segment. Issues covered include the E-Mini S&P, gold and silver futures and the Dollar Index.

I've set some ambitious benchmarks for gold and silver today for those of you who are wondering what it would take to put bulls back on the offensive. There's also a short recommendation in the E-Mini S&Ps that would effectively reverse the long position we took home overnight on Thursday.

We are long a single contract from 1391.25, the result of a trade signaled during yesterday morning's weekly tutorial session. You should be using a "dynamic" trailing stop that will subject you to risk no greater than a third of what you stand to make if the futures reach the target. With a target at 1412.75 and a so-far high of 1397.50, that implies a current trailing stop of 5.00 points, but it would narrow to 4.00 points as the futures approach, for example, 1400.75 (leaving 12 points to the target).   Because the target is a Hidden Pivot that looks like a good place to get short, I'll suggest doing so in either of two ways:  1) via camouflage; or, 2) if you have cashed out the long for an implied profit of $1075 per contract, offer four contracts short at 1412.25, stop 1413.25.  If you use the second strategy, your first partial profit should be taken on a pullback to 1408.75, but you'll be on your own thereafter. _______ UPDATE (10:28 a.m. EDT):  We exited the position this morning at 1396.50, based on the 4.00-point trailing stop that would have been in effect at the so-far high, at 1400.50.  Our profit on paper was $262 per contract before commissions. The 1412.25 target remains valid and is still a good place to try shorting.  Would you like to learn how we use the ‘camouflage’ trading technique to significantly reduce entry risk? Click here for details.