December 22nd, 2014
Published Daily

DIA – Dow Industrials ETF (Last:150.21)

by Rick Ackerman on June 27, 2013 9:34 am GMT

The 150.39 rally target shown is a tempting spot to try shorting, since the ABC rally pattern has many characteristics that we like. Accordingly, I’ll recommend buying four July 146 puts if DIA trades above 150.35. Stop yourself out if the puts trade for 0.20 less than you paid for them. You could also offer 400 shares short at 150.37, stop 150.47. ________ UPDATE (10:50 a.m.):  Today’s comically stupid rally has gotten us filled a hair off the so-far high. For tracking purposes, and based on reports in the chat room, I’ll use a 0.79 fill on the puts, implying you should stop yourself out if they trade for 0.59. Our theoretical risk, commissions included, will be about $100. ________ UPDATE (June 28, 11:00 a.m.): Just to have something to shoot for, let me suggest offering four July 142 puts short for 0.82 against the July 146 puts we own for 0.79. Mark the order good-till-canceled.  Sure, this is greedy and overweaningly ambitious. But we are worth it!  My strong gut feeling is that the dumb consumer-spending story that catalyzed Wednesday’s feeble short-squeeze is about to be overwhelmed by the hugely more important story that the Fed-engineered ‘housing boom’ is deader than Kelso’s nuts.  In any case, the stop-loss I’ve advised limits theoretical risk to $100, commissions included.

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