The short I’d recommended from 341.09 (see inset) ended the week underwater, but that hasn’t diminished the textbook appeal of the pattern itself. Traders seemed as eager as we were to profit from the short side, but they seem to have spent half of Wednesday and all of Thursday and Friday trying to gnaw their feet free from a tightening trap. Anyone who stuck with the short position will have the possible opportunity on Sunday night to experience that rare feeling of exhilaration bears get when the markets are clobbered by a weekend surprise. For now, however, the original downside target at 329.55 remains theoretically viable. Be sure to cover half at p=337.24 if possible. _______ UPDATE (May 25, 12:22 a.m. ET): The short missed getting stopped out by a hair. Assuming it happens today, beware of a high marginally above C=344.93 that gives way to renewed weakness. _______ UPDATE (May 25, 11::10 p.m.): The head-fake happened as predicted, but the feeble decline that has followed so far suggests bulls will soon be bounding higher. ______ UPDATE (May 26, 5:29 p.m.): Or perhaps not. DIA appears to be rolling over. In any event, bears will soon have holiday seasonality to contend with. _______ UPDATE (May 27, 6:15 p.m.): As expected, it’s a-wafting we will go, with bears in hibernation ahead of the holiday weekend.
DIA – Dow Industrials ETF (Last:343.25)