We went bottom-fishing briefly on Friday, only to get stopped out for a nominal loss when DIA exceeded a minor correction target by more than a point. While this hints of more weakness to come, the chart shows why drama is unlikely. ‘Nothing’ has happened since early February, when the Dow embarked on a 1200-point rally, then went into a rangebound dirge that has stretched the patience of bulls and bear alike. I can suggest two ways to trade this chart over the next day or two: 1) short p2=175.77 ‘mechanically’, stop 176.40, for a shot at D=173.89 (I’ve sketched a hypothetical set-up); or, 2) bottom-fish that last number, a Hidden Pivot support, with a stop-loss as tight as 0.11. _______ UPDATE (July 27, 4:59 p.m. EDT): My target caught the intraday low within 11 cents, but 177 calls that could have been bought for as little as 0.18 never rallied above 0.23. There was little reason to hold the position overnight, so I am not establishing a tracking position.
