Tutorials

This session contains some of the most detailed material presented to date on how to use puts and calls to leverage Hidden Pivot targets. The specific stocks discussed were Newmont Mining, which was nearing a downside target where calls could be purchased to bottom-fish; and the QQQs, in which we had recently initiated a bearish position by purchasing puts within pennies of a predicted top. We also examined in exhaustive detail a “live” trade initiated in Comex Gold earlier that morning. Risk management in real time was our chief focus.

When I introduced Camouflage Trading two years ago, the Mother of All Bear Rallies was already a year old. As such, we haven’t gotten much practice applying the technique to trades from the short side. Is it time to start honing our chops in anticipation of a resumption of the secular bear market? My answer is no, not yet, for reasons that are made clear in this lesson. We also deconstructed a trade in gold that had been recommended the night before, and then finished the session with a look at Crude Oil futures.

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.

Having established a long position in Silver Wheaton two days earlier just 13 cents from a potentially important corrective low, we took a close look at the stock’s vital signs to determine what to do next. SLW had in fact rallied $1.80 from the bottom, or a little more than five percent, turning June 40 calls that we’d acquired into solid winners. With the goal of shorting June 42 calls against them, how far should we try to stretch this one? As you will see, there were good technical reasons to let our profits run.

Bullion shares and futures were chugging higher when we looked in on them this morning, but S&P futures were not blithely following their lead. Are stocks nearing a potentially important top? The suspicion grows, and so we took a good look at some Hidden Pivot rally targets in the E-Mini S&P that are close to being achieved. They line up all-too-nicely with a Dow target at 13085 that has guided us for nearly two months. As this session makes clear, it is time to reef the sails.

Can a sharp rise in the price of crude oil warn of imminent war in the Middle East? We could find out soon, since NYMEX futures look ready to explode. Under the circumstances, we considered April Crude’s chart in detail in order to establish technical criteria for creating a ‘war alert’ on the charts. We also looked closely at Comex Gold, since it has been moving in tandem with oil.

Our continuing search for some finer nuances of Hidden Pivotry led us to this day's intensive examination of the charts of April Gold and the March E-Mini S&Ps. Although we found no compelling reason to trade either at the time, this conclusion was buttressed by thoughtful analysis of 'dueling' impulse legs that were everywhere to be found. Our expectation of further tedium was borne out when stocks and bullion finished the day with a sleep-inducing performance that proved unworthy of our diligent attention.

Gold was getting whacked on this particular morning after head-faking early in the session. We placed our bets on a projected bottom at 1729.00, and, lo, the futures rallied nicely from 1729.10. Although we had to drill down to the tick chart to find a ‘camo’ opportunity to get long at the bullish turning point we’d anticipated, the trade came a cropper when it failed by a couple of ticks to reach the midpoint pivot. Even so, the 1729.10 low held for more than an hour-and-a-half, validating our approach if not a bullish outlook for the remainder of the day.

Gold was moving higher, although not so energetically that we might have expected a 1771.50 target to be reached. Even so, there were enough technical reasons to support a bullish outlook for the near term, and we examined them in detail during this session. We also lingered on the lesser charts of the E-Mini S&Ps, concluding – correctly, as it turned out -- that the ferocious rally begun at the opening bell was nearly spent.