Although we were eager to get short last week at a promising Hidden Pivot target at 285.75, DIA never quite got there. The actual top occurred at 284.96, and although that was close enough to allow one to fashion a low-risk ‘rABC’ trigger, there were no reports in the chat room from anyone having done so. We can still attempt it if the futures make another run at the target, however. Specifically, I’ll recommend buying four Nov 20 270 put options if DIA gets within 0.03 points of the target. They should be trading for around 1.20, but this is just a ballpark estimate that should be disregarded if it seems awry. In any event, I will provide more-timely guidance in real time, since I do not want anyone to pay up for these options. Our odds will never be great betting on direction with naked puts or calls, and every extra penny paid for an option will further reduce our chance of making money. _______ UPDATE (Nov 9, 8:25 a.m. ET): Following last night’s record-breaking rally in index futures, the new target lies at 304.07. The red line indicates the hypothetical top of the overnight move, as registered by the futures. _______ UPDATE (Nov 10, 7:30 p.m.): Surprisingly, DIA has rebounded without testing Monday’s cavernous gap. There is just too much bravado in this behavior for me to warrant it as bullish. Crazy is probably more accurate, and so we should not expect the show of strength to last. _______ UPDATE (Nov 12, 9:15 p.m.): Moderate weakness has brought DIA down into the gap. Its magnetic pull is strong, and there is no sign of ample buying interest to power DIA out of the hole. Look for more slippage, presumably to p2=282.74. That would trigger a weak ‘mechanical’ buy, stop 275.63.
DIA – Dow Industrials ETF (Last:291.07)