The 176.40 target of the minor downtrend shown could offer an enticing spot to try bottom-fishing Friday morning. Obviously, the opening would have to be merely moderately weak in order to leave this Hidden Pivot intact. Here are two possible ways to play it: 1) buy July 31 177 calls with DIA trading within pennies of the target; or, 2) buy July 24 177 calls for an instant turn, even if short-lived. The first strategy will work if DIA rallies sharply and continues higher next week. This is risky because it goes against broad weakness that has persisted since mid-May. The second strategy is a jackpot bet of sorts, and its success would depend on whether or not slightly out-of-the-money calls can be bought for bupkus (i.e., 0.10 to 0.30) in the opening minutes day. My guideline on bet size for option #2 would be to wager no more than you would on a 20-to-1 horse with a name that sounds lucky. Be ready to cash out of half the position if the options double in price in the early going. _______ UPDATE (11:02 a.m. EDT): DIA has traded down to within 3 cents of my target this morning. The 177 calls are getting brutalized by time decay. If you buy them, use a bid midway between bid/asked; currently that would be about 0.95. A stop-loss at 0.75 would be appropriate thereafter, since, if it’s hit, that would imply DIA has crashed the 176.40 target/HP support. _______ BULLETIN (11:04 a.m.): DIA has JUST crashed the target. I’d cancel the bid if you haven’t bought the calls yet, or exit them immediately if you did.
