Tutorials

During this session, we looked at the stock market just minutes before it entered a very steep dive. With the Dow about to fall 400 points, it was still not too late to try to get short. Most of the lesson was devoted to this task, and although we were unable to force a trade, we looked at some set-ups that were imminently about to trigger. We also revisited the use of ABC patterns to establish precise bids and offers for put and call options. This tactic holds great promise to sharpen our percentages when we trade options. I would therefore strongly recommend that you review this portion of the recording closely.

The emphasis during this tutorial session was on put and call options, since they can be targeted using the same method we employ to predict price swings in stocks and index futures. ABCD pattern analysis turns out to be a relatively easy way to determine a fair price for an option without having to correlate its price to that of the underlying stock. Of particular interest is a gambit in NFLX, where we looked to buy put options if the stock rallied to a Hidden Pivot target. We settled on a $1.40 bid when they were still trading for $2.10 -- and eventually got filled. The rationale we used to come up with a $1.40 bid takes in a wide swath of trading logic, so check it out!

For the good stuff, skip to the TSLA analysis toward the end of this recording, which mostly documents the sluggishness of a day on which the markets were awaiting news from the Fed. We looked first at TSLA’s long-term charts to give us a bias – in this case a bullish one. From there, we zoomed to the very lesser charts to find a day trade that aligned with our outlook. The epiphany that followed came in the form of a very subtle look-to-the-left peak that could have made a trader’s day. See if you don’t agree.

Although we failed to squeeze off a trade in any of a half-dozen vehicles that we looked at during this session, there were several ‘mechanical’ set-ups that promised to pan out after the class was adjourned. The tactic should be familiar by now to those who have attended Wednesday tutorial sessions regularly, but the small lessons contained herein will stretch your knowledge just a bit further. In particular, the material covering camouflage trades that use ‘mechanical’ signals for a trigger make this recording well worth your while.

With Thanksgiving a day off, we looked to force a trade on an especially slow day. The focus was on stocks rather than futures, because the latter were barely moving. Although we were unable to come up with an instant winner, TSLA, AMZN and GOOG all beckoned with imminent possibilities. The trade set-ups that we looked at could start to pan out by the time you read this, so check out the recording if you’re looking for something to do as the week draws to a close, or perhaps next week.

We went back to the basics during this lesson, with a detailed discussion of the “perfect” ABC pattern, timed-buy-stop entries, and a grading system that enables us to develop horse sense over time by rigorously and consistently applying mechanical principles. The session also includes some speculative ruminations on such popular trading vehicles as the Dollar Index, the Euro, gold and the Dow Industrials.

Moving up, down and sideways on charts, put and call options exhibit the same predictable price behavior as stocks, commodities and futures contracts. The ABC ‘tracks’ they leave on charts allow us to buy and sell options at opportune times, to manage the risk of ongoing trades, and even to surmount the quirkiness of wide bid/asked spreads that are so common in the options game. During this session, we observed option price behavior with an eye toward leveraging swings in the underlying vehicles. We also revisited some cutting-edge techniques, including adapting ‘camouflage’ to facilitate ‘mechanical’ bids and offers.

‘Mechanical’ trades and ‘camouflage’ entries have received a great deal of emphasis in recent months, mainly because they consistently deliver winners with relatively little entry risk. During this session, we stay on the cutting edge of Hidden Pivot tactics by combining the two methods in single trades. As you will see, this greatly increases entry opportunities along the path of ABC-type patterns, especially very large ones.

We identified several camouflage trade set-ups during this session, although none triggered under our scrutiny. The lesson is useful nonetheless, since each opportunity was closely rationalized according to our criteria for camouflage trades. We also considered two “counterintuitive” entries of the sort I have increasingly emphasized over the last several months. Rounding off the session are some set-ups in real time that utilized ‘mechanical’ bids and offers.