Tutorials

We happened to be looking at gold and silver charts at precisely the same time DaBoyz decided to shake them down. Ironically, this proved educational mainly because the nasty price action left the larger, bullish picture in bullion undisturbed. We discussed camouflage entry strategies predicated on recovery rallies that were still speculative at the time of this lesson. We also delved into some of the technical reasons why the bear rally in the broad averages appears to be unstoppable, at least for the moment.

Subtleties abound in this presentation, including a discussion of some of the more subjective distinctions between “internal” and “external” peaks. Sometimes it’s hard to tell the difference, but if you view this recording the task will probably become easier. We looked at Gold, Crude and the E-Mini S&P, and subsequent price action in each bore out our analysis. The lesson ended with scrutiny of HUI’s longer-term charts, which suggest that bulls may need to be very patient, perhaps for yet more months.

An exceedingly boring market led us to a fruitless search for trading opportunities in Comex Gold and the E-Mini S&Ps. The session had educational benefits nonetheless, since it shed light on the extremes to which we will sometimes go in order to force a trade. In this case, it got us stopped out of the E-Minis for pocket change. We learned once again that our expectations for a camouflage trade can be no better than what is promised by whatever pattern of larger degree subsumes it.

This session provides a birds-eye view of a bull trade that we initiated in April Gold. Using the midpoint support of a minor downtrend to go bottom-fishing, we got long as the futures turned precisely from the pivot. Although the subsequent rally was a dud, we were able to see it coming by focusing on the tick chart. As a result, we were able to exit the position with a small profit just in time to see the futures break down and head lower. This recording ranks among the best in the archive for purposes of examining the logic of a trade in real time.

There are times when the big picture argues against looking for a clever entry strategy, and this was one of them. Although Gold was bearish on the daily and hourly charts, its downward progress was labored, making a short unpromising. But there was no conviction behind the rallies either, and so we concluded there was nothing to do. The same was true for the E-Mini S&P: the hourly chart had a bullish bias and downward corrections were unconvincing, but there was not enough energy behind the rallies to suggest they would go anywhere. Thus did we learn that an important strength of the Hidden Pivot Method is its ability to tell us when not to trade.

With precious-metal futures getting sacked, we looked at a chart of the NYBOT Dollar Index that pointed to even more weakness ahead for gold and silver. The dollar is following through on a very impressive A-B impulse leg and appeared likely to blow through midpoint resistance within the day or perhaps the next. However, on the longer-term charts, the dollar’s surge over the last couple of months, powerful though it may seem, looked like no more than a middling bear rally. We also looked at the E-Mini S&P chart as it was breaking down in real time, but the lesson here was to not read more into the chart than it is actually revealing. The final chart we considered showed March Coffee to be slowly emerging fom the ravages of a bear market, though not yet a buy.

Charts for Gold, Wheat and the Mini-S&Ps were filled with opportunity, making this an especially fruitful session. Bullion futures were sinking, and the evidence pointed to still lower prices. Even so, we found ways to speculate against the dominant trend with relatively little risk. Wheat also gave us a buying opportunity against a bearish backdrop. The camouflage entry spot we found was as pretty as they come, so this segment of the session bears a close look. The session concluded with a look at the E-Mini S&P, which was rallying from an exact Hidden Pivot midpoint. This is as we might have expected, since the Great Bear Rally of 2009-10 is never-ending.

We devoted the entire sessions to Comex gold and silver charts, poring over a promising rally that has unfolded in the opening days of the New Year. Futures contracts for both metals had triggered conventional Lindsay “buy” signals earlier in the day, but there was a question as to whether the signals were subtle enough to be used for purposes of camouflage entry. The answer was a qualified “yes” that touched on the psychological dimensions of the charts. Indeed, the ultimate goal of Hidden Pivot analysis is to move beyond the mechanical rudiments of the system and toward a nuanced understanding of the psychology of markets.

With gold in the throes of a major correction, we took a long, hard look not only at the Comex futures contract, but at the Dollar Index, where a short squeeze about to enter its second month has progressed, much to the detriment of bullion. Still-lower prices for gold seem likely, as do higher prices for the dollar. What would change this scenario? A good, strong impulse leg on the hourly chart. Until it happens, however, we should infer that the downtrend is likely to continue. This same idea was relevant in our analysis of T-Bond futures, which are in a protracted decline.