Tutorials

The Dow was up around 250 points when this session began, and because the broad averages seemed reluctant to correct, we looked for opportunities to get aboard a presumptive second leg up. Mostly, this entailed hunkering down on the very lesser charts of the E-Mini S&P. After one false start, we found a promising entry point with just a few ticks of initial risk. The rationalizations here are very finely nuanced and required as much psychologizing as paying attention to the mechanical details of tradable patterns.

Skip to the tail end of this lesson for some finely shaded trading decisions that allowed us to get November Crude’s range and rhythm. Oil futures aside, much of this session is focused on the lesser charts. That is not only where the action is for day-traders, but for swing traders looking to establish long or short positions with relatively little risk.

This session is loaded with good stuff – a must-view for anyone interested in the new tactics we’ve been using to identify the best (i.e., least stressful) entry opportunities. Continuing a theme of the last several sessions, we explored purely visual techniques for initiating trades without heed to the old rules concerning ‘legitimate' impulse legs. Toward the end of the session we shorted ESZ in real time. The process of rationalizing the trade is all there, detailed at the level of the 30-second bar chart.

This lesson, although at times a study in tedium, produced paradoxically interesting results. On a relatively quiet day, we focused on two stocks - Google and Priceline – that were moving. There was a lot of psychologizing and second-guessing along the way, but the unexpected result was a quick $800 profit in Priceline. This happened after we’d been stopped out for a $250 loss. The lesson here is that it’s important to get back on the horse if you’ve been thrown. The confident trader should expect losses; they are stepping stones to profits -- and therefore an essential part of a winning game.

Skip to around the middle of this lesson to see how we found a profitable trade in December Crude on a day when the markets had ground to a halt waiting for the usual ‘momentous’ announcement from the Fed.  We used a bearish, big-picture target to inform our bias; then we identified a very subtle, downtrending ABC pattern on the sub one-minute chart to find our entry point. The initial risk was just seven ticks, and we were able to cover three quarters of the position before the session ended.  Potentially ‘easy money’ awaited at the target, since we had a nice profit to cushion a generous stop-loss on any bottom-fishing attempt.

We found one fat trade during this session – a short in December Crude that required a second attempt to produce a winner. If you want to refresh your familiarity with the camouflage entry technique, this segment will be instructive, since the trade we found occurred on the one-minute chart and subjected us to initial entry risk of just five ticks. We also pondered gold’s latest weakness. As you will see, price action at the midpoint pivot was predictive of a further slide in the December contract to 1234.10 that had yet to occur when this description was published .

I have been offering calendar spreads as a relatively riskless way to play the bull market in T-Bonds. If you’re interested in initiating the spread but are unsure about how to do it, this recording provides explicitly detailed instructions for buying the Oct 18/Sep 12 calendar spread at the 120 strike that anyone can follow. It also explains how to roll the spread forward each week so that we wind up owning the October 18 calls for nearly nothing or perhaps even a small credit. There is other material as well, including an analysis of the Jackpot Bet I’d proffered for Priceline this morning. But if you’re interested only in the material concerning the TLT strategy, it begins 11 minutes and 26 seconds into the session. The entire recording, which also includes Hidden Pivot analysis for Gold, E-Mini &S&P and EUR/USD, runs a little more than an hour.

We spent the entire hour chasing Netflix lower, zooming our way down to the 15-second bar chart in the process. The niggling details of finding tradable patterns at that level are surely worth pondering, but the more valuable insights came from psychologizing the dips, twists and turns. The ending is the punchline to a joke that all traders have been the butt of at one time or another, but I won't spoil it for you. Suffice it to say, NFLX bounced from a low that was almost, but not quite, perfect.

In this lesson, I reviewed some basic Hidden Pivot concepts, since there were a number of traders in the room who have registered for the upcoming webinar on August 27. We dwelled mainly on the E-Mini S&Ps in real time, since an early-morning rally offered the possibility of tradable follow-through. Alas, stocks merely marked time for the remainder of the day. But novices and experienced traders alike will find value in this recording, since it examines the psychology of a bull trade as it played out on the lesser charts.