Tutorials

This one-hour demonstration from Friday (2/25) begins with a look at some key concepts related to the Hidden Pivot Method and to the “camouflage” trading technique. We then segue to real-time charts, looking for actual trading opportunities in such popular vehicles as Comex Gold, E-Mini S&Ps and the Mini-Dow during market hours.

Although we were minutes behind some excellent opportunitites to get short in the Mini-S&P and the Mini-Dow, their respective downtrends played out in ways that validated our bearish outlook in real time. The weakness in these vehicles represented an ostensible follow-through to the previous day’s sharp selloff, and so we were especially interested in determining whether the decline was strong enough to imply a resumption of the secular bear market. The jury is still out on that question, but there were nonetheless encouraging signs that this was the case.

With major, long-term targets not far above in several key vehicles that we monitor closely, we double-checked the Hidden Pivots not only for accuracy but for coincidence, since they could conceivably produce a very important top for the stock market within a week or less. Indeed, the S&Ps, Dow and bellwether Apple are all bound for ‘D’ rally targets that could all be hit around the same time. Meanwhile, although we looked for a real-time trade in the E-Mini S&P, the lesson here was that it is sometimes best to do nothing.

A nifty trick you can perform with the Hidden Pivot Method is predicting long periods of tedium based on the presence of “dueling impulse legs.” We found them in copious supply in the chart of the Dollar Index, but also, correspondingly, in the euro’s intraday and daily charts. The markets were flatlining on this day, but we tried nonetheless to force a bullish trade in the E-Mini S&P. Alas, it continued lower without tripping a “camouflage” entry signal. We also discovered a possible breakdown shaping up in Crude, with a similar pattern already developing in Copper.

A slow day on Wall Street provided a perfect opportunity to test the ability of camouflage tactics to deliver profitable trades even when “nothing” is happening. Earlier that morning, during an impromptu webinar, we’d already found trades in, respectively, Comex Silver and the E-Mini S&Ps. However, this session allowed us to revisit both vehicles to try again. Since a goal of these sessions is to decide whether to trade a signaled opportunity, we decided to pass up a trade in Gold for reasons that even seasoned Pivoteers will find instructive.

There are some fine nuances contained in this lesson, which focused on a minor bullish opportunity in the E-Mini S&Ps as well as a short in Comex Gold with $16 of downside potential. Because stocks and precious metal futures have been trending higher for so long, it will require a psychological adjustment on our part to trade them when they are falling. Thus, this session is part of a process to get our minds right for the inevitable resumption of the long-term secular bear in stocks.

We found an E-Mini bottom to trade during this session, since the futures had plummeted 12 points, to within a hair of an opportune midpoint pivot identified that same morning in a tout. After the trade triggered, we followed it to the point of “success,” i.e., to the C-D midpoint, where we were able to cash out half of the position. Moving on to other charts, we found some good technical reasons to be untroubled by bullion’s weakness. We also saw, in real time on the Diamonds’ weekly chart, why stock market bears should brace for more upside of as much as 900 points.

Because several of the vehicles that Rick’s Picks trades and forecasts actively were approaching imnportant inflection points, we spent most of the session identifying possible trade set-ups. Woeking mainly with hourly charts, we located precise spots to get short in the Mini-S&P, the Mini-Dow and the Diamonds (by way of buying February 115 puts). Gold and Silver were in no hurry to go either up or down, but a close analysis revealed why, amidst the most serious correction in months, our bias should be moderately bullish.

Gold and silver had gotten sacked earlier in the week so we took a close look at their respective charts to see whether there were any signs that the weakness might start to snowball. In fact, the most bearish technical evidence we turned up hinted only of short-lived strength in the dollar. Even this had to be qualified, however, since the rally in the dollar was proceeding from an A-B impulse leg with a fatal flaw. Check out this video if you want to see how even minor pieces of technical evidence can give one a confident grasp of the big picture.