Let’s add the Dow Industrials to the list of major stock indices that we would like to short. This can be done using a midpoint pivot of 111.50 from the weekly Diamonds chart. We recommend selling at 111.37 with a stop at 111.77, risking $40 per 100 shares traded. The equivalent of the pivot in the June Dow futures contract is estimated to be 11087. (Posted by Doug McLagan) ________ UPDATE (2:40 a.m. EST, March 31): In reconsidering the risk/reward characteristics of this trade, we have decided to cancel the recommendation. Should the target be reached, however, traders should be alert to hidden pivot-based opportunities to get short if a reversal there appears to be underway. For the Dow Jones Industrial Average, the midpoint is at 11156.44.
The Indoos are wafting effortlessly above a midpoint resistance at 10771 (60m chart, A=10641 on March 16), implying that a finishing stroke to its ‘D’ sibling at 10835 is imminent. That would put the Dow up just 64 points on Friday before a stall becomes likely. Plan on shorting there using the Diamonds or the June Mini-Dow with a very tight stop-loss. If you choose the latter, a Hidden Pivot at 10790 is equivalent to the one given above for the DJIA. _______ UPDATE (12:11 p.m. EST): The Dow and related vehicles head-faked on the opening, recording highs that fell somewhat shy of our short offers.
Like so many other trading vehicles, including index futures and ETFs, April Crude has a compelling rally target that lies within an inch of mid-January’s highs. The precise number in this case, a Hidden Pivot at 84.74, would fail by a hair to surpass January’s 84.96 high. (The comparable target for the DJIA and the Diamonds, however, would slightly exceed the January high.) Clearly, this is a crucial juncture for many of the issues we trade and/or monitor. And while it is hard to imagine the targets will not be reached, it is by no means a foregone conclusion that they will be decisively exceeded. All in all, it is probably a good day to lie low and spectate for a change.
The Dow looks like it’s setting up for a second consecutive 100-point decline. I’ve sketched it out on the 15-minute chart, and you can assume that a precise bounce from the indicated midpoint would portend a follow-through precisely to the target once ‘p’ is breached. The pattern cannot be interpolated to trade the futures, however, since they were wafting blithely above point ‘C’ Tuesday night.
A Hidden Pivot resistance at 10266 appears likely to end the Indoos’ pathetic show of bravado, which began a week ago from 9835. That’s if the rally doesn’t terminate at some lower level — a possibility that would be signaled by choppy incertitude in the first hour or so of today’s session. An early dip to 10114 should be regarded as a buying opportunity, since that’s the Hidden Pivot midpoint associated with the target. _______ UPDATE: The Indoos gapped through the 10114 support on the opening bar, negating the trade but also telegraphing the further weakness that has ensued.
Te Dow so far has avoided falling the last 23 points to a 9656 correction target. That’s not bullish per se, but it would become so if the blue chip average creates a bullish impulse leg on the hourly chart without first kissing the target. That would happen on a 9859 print, so set an alert on your charts to warn of a possible reversal.
The pattern is not perfect, but we should nonetheless respect the 10071.34 target in this vehicle, since it will be untainted by the kind of shenanigans that can sometimes waylay the index futures. I’ve carried the targeting to two decimal places because, well, you can never tell how close you’re going to get. If this intelligence is to be tradable, you’ll need to interpolate. The Mini-Dow equivalent is 10014.
There are no DJIA patterns that I particularly like, but the whimsical rule-breaker shown in the chart will do in a pinch. I’ve decided to legitimize it because of the oscillations around the 9290 midpoint pivot, and also because the most recent phase of bear-rally hysteria launched from a low not far beneath it. Anyway, the bottom line is a Hidden Pivot target at 10493. Although I wouldn’t try to go short the world at that price, I’m pretty confident about using it as the first number above 10000 where I might believe a top could form. One thing we can be nearly certain of is that 10000 itself will show no particular stopping power. If such an occurrence were even remotely possible, the stock market would cease to be the engaging carnival that it is. At 10493, however, Dow 11000 would be a glimmer in bulls’ eyes — and Kudlow’s wet dream.
Putting aside the broad bullishness of today’s commentary, the lesser charts suggest that stocks are too overextended to embark on a new leg up without some sort of pullback first. The hourly chart of the Dow (see inset) yields only one logical target at the moment, at 9947, but the imagination balks – mine does, anyway — at the notion of another thrust as steep as the A-B impulse leg already concluded. Just in case, though, the midpoint pivot associate with the target is 9703. Strictly speaking, it should serve as our minimum upside objective for the near term.
Yesterday’s gratuitous ups and downs left the Dow a little less than 200 points shy of the 9476 target we’ve been held in mind. More immediately, there’s a lesser resistance at 9331 that we can use to gauge the strength of any uptrend that develops today, and another at 9375 if the first number is breached by more than 3-4 points. Alternatively, the Indoos would need to drop below 9133 today to turn the hourly chart bearish. _____ UPDATE (1:01 p.m.): Today’s opening bar spurt missed the 9331 target by a whopping 6 points — and no, I cannot tell you why so many thrusts and swoons lately have been missing our Hidden Pivot targets by inches and centimeters. But yes, it is becoming annoying.
Let’s add the Dow Industrials to the list of major stock indices that we would like to short. This can be done using a midpoint pivot of 111.50 from the weekly Diamonds chart. We recommend selling at 111.37 with a stop at 111.77, risking $40 per 100 shares traded. The equivalent of the pivot in the June Dow futures contract is estimated to be 11087. (Posted by Doug McLagan) ________ UPDATE (2:40 a.m. EST, March 31): In reconsidering the risk/reward characteristics of this trade, we have decided to cancel the recommendation. Should the target be reached, however, traders should be alert to hidden pivot-based opportunities to get short if a reversal there appears to be underway. For the Dow Jones Industrial Average, the midpoint is at 11156.44.
