Today’s wilding spree demolished two ostensibly important rally targets we were using for DJIA and DIA at, respectively, 23,665, and 236.59. The implication is that bulls remain well nigh unstoppable. The rally produced a small trading loss of about $80 on some DIA puts purchased for 0.96 that were stopped out when they hit 0.75. The ease with which buyers exceeded the targets suggests they are well capable of achieving significantly higher levels. Accordingly, I’ll suggest using the 245.06 target shown for now, although it won’t be in play theoretically until such time as p=238.71 has been decisively exceeded. If the 245.06 Hidden Pivot is reached it would equate to a Dow rally of about 700 points from current levels. There may be an opportunity along the way to initiate long positions ‘mechanically’ with risk under very tight control, so stay tuned to the chat room and check ‘Email Notifications’ on your account dashboard if you want to be apprised in real time. ______ UPDATE (Nov 29, 9:45 p.m. EST): Let’s try to leverage the 245.06 target by legging into a calendar spread at that strike. Start by bidding 0.35 for eight Dec 22 245 calls, but only with DIA trading 239.34 or higher. If you buy the calls, immediately offer a like number of December 8 245 calls short for 0.14, good-till-canceled. You can also work this trade as a spread order by using a limit price of 0.21 (debit) for eight Dec 22 245 / Dec 8 245 call spreads, but again, only if DIA is trading 239.34 or higher. This order should be marked good through Thursday. The strategy is designed to produce a maximum profit with DIA rising to 245 over the next three weeks. The spread would be trading for around 0.60 then — triple our bet! — but we may be able to fatten our gain by rolling the short Dec 8 245 calls into short Dec 15 245 calls. This is the same as selling the Dec 15 245 / Dec 8 245 calendar spread. Click here to access an article I wrote about this strategy for SFO magazine. ______ UPDATE (Nov 30, 6:05 p.m.): With today’s monster rally the calls ran away from us, trading no lower than 0.65 and eventually topping at 1.95. The idea was a good one; we were just a step behind, this time.
