Our favorite bellwether has rallied 11% in three days off last week’s bombed-out low. For all of the effort, the $61 rally has yet to surpass even a single prior peak, let alone the two we require to signal a proper impulse leg. Can bulls bull their way past the first peak in sight, 625.99? We should put aside this question for now and focus on the low-hanging fruit if it comes our way: bottom-fishing any ‘p’ midpoint pivot that evolves from a pattern like the one shown. If Monday’s 608.50 high stands, p will fall at exactly 569.10. A stop-loss as tight as 15 cents is suggested. [Update: This feels too tight. I’m now suggesting a stop as wide as 30 cents.] If you use call options instead of stock, stick to near-the-moneys with no more than two or three weeks left on them. Tie them to a tight stop loss and, to neutralize the risk, take a partial profit early on if it’s available.
