DIA

I usually suggest trying to make a few bucks trading with the trend before initiating a position against it at a target, but this time I'll make it as simple as I can. We will be looking to buy near-the-money put options if and when DIA gets very close -- meaning within 0.05 - 0.15 points -- to the 222.73 target shown.  This trade could take at least a few days to ripen, but if you want to be apprised of actionable recommendations in real time, be sure to check 'Email Notifications' on your account page. There is a chance we may have to do the trade, presumably using a camouflage set-up, with DIA having failed to reach the target. The chat room will be the best place to stay on top of this prospect intraday.

This tout is mainly for information value, since the opportunity to buy puts on DIA at the perfect price -- in this case, Sep 15 218 puts for 1.18 -- has passed. My rule of thumb is to by puts or calls only when we expect them to go in-the-black within one minute. This implies buying them when the underlying vehicle is hitting a targeted high or low.  DIA did so midway into Wednesday's session when it touched the red line, a midpoint Hidden Pivot resistance at 219.23 that I hadn't noticed Tuesday night.  I am displaying this chart after-the-fact because it still has predictive value. Indeed, if the bull market is about to end, we should see DIA pull back from p and fall beneath C=215.73. Alternatively, if DIA forges higher in the first hour or two on Thursday, that would imply it's headed to new all-time highs. In either case, we'll trust what we see, not what we might wish for.

There's no denying these are quite interesting times, in a Chinese curse sort of way.  Only an asteroid on a collision course with Earth, or an ISIS nuclear detonation, could make the world seem any more interesting than it already is.  Under the circumstances, it's tempting to predict that, any day now, the stock market will recalibrate itself to the grim realities of a civilization in eclipse, and, more urgently, to a Trump presidency dangerously adrift. With the foregoing in mind, I present today a chart that shows DIA, an ETF vehicle that tracks the Dow Industrials, rolling down from on high. There is a lot of white space below it, more than ever before, and that is what makes the chart seem so scary.  Even so, you can see that all such disturbances in the past were ultimately resolved in favor of bulls, usually quickly.  Perhaps that will prove to be the case this time as well. I am watching AAPL in particular to keep me from hitting the panic button prematurely. The stock looks bound for a $168 target that lies $11 above current levels. Assuming it is achieved within he next 3-5 weeks -- a prospect that I would rate a 60-40 bet at the moment -- higher prices lie in store for the broad averages as well. Regardless, if the sharp selloff begun last Wednesday starts to snowball in the days ahead, sending DIA below July 24's 214.68 low, we should brace for a possible avalanche.  We'll be watching the lesser charts in the meantime, so that it does not catch us unawares. We will also look to buy puts on strength, meaning not now, not yet.

DIA blew past a clear Hidden Pivot resistance at 217.45 on Friday with such panache that we must assume new record-highs are coming. If so, you can use the 220.19 target shown as a minimum upside projection. A pullback to the red line can be bought 'mechanically,' stop 214.54; or, with somewhat less risk, to the green line, stop 211.69. We hold four put options purchased for 0.82 that should be tied to a 0.55 stop-loss. That means you should sell them at-the-market if they trade for 0.55.  Our theoretical loss on the position would be $108. _______ UPDATE (Jul 31): An hour before trading ended last week the puts fell to our stop; then, they subsequently traded as low as 0.48 before the closing bell. You should have exited the position. We'll try again when appropriate, always with little patience or tolerance for trades that don't go our way when we are trying to pick a top. The fact that DIA paid no heed to so clear a Hidden Pivot resistance suggests Mr Market aims to inflict yet more punishment on bears. This time, he beat us for a big $108._______ UPDATE (Aug 2, 10:45 a.m.): DIA topped this morning at 220.13, exactly 0.06 points from the rally target I'd provided, before falling to a so-far low at 219.54. If you got short at the top please let me know in the chat room so that I can determine whether to establish a tracking position. _______UPDATE (Aug 3, 12:03 a.m.): Only one subscriber reported having gotten short using my rally target, so I have not established a tracking position. Regardless, the 69-cent pullback that followed the high should have been used to take a partial profit. Assuming you did, you should tie what remains to a 220.21 stop-loss.

We've been using a minor Hidden Pivot at 217.45 as a rally target, but today's chart shows what could happen if that resistance is brushed aside. Specifically, we'd need to raise our sights to 230.08, implying a possible 1500-point rally in the Dow Industrials. The 217.45 resistance is still worth shorting for a pullback, and so I'll continue to suggest that you buy four August 4th 217.50 puts if and when DIA gets within 0.05 points of the target. I estimate they will be trading for around 0.80 if that occurs on Wednesday or Thursday, but you should monitor the option bid/asked as the underlying approaches the target in order to get the best possible price. Mark the order good through Thursday._______ UPDATE (Jul 27, 5:42 p.m. EDT): Based on subscriber reports in the chat room, I've established a tracking position consisting of four Aug 4 217.50 puts purchased for 0.82 (some of you did better, some slightly worse). For now, tie the options to a 0.55 stop-loss. That means that if they trade at that price, you should sell your contracts at-the-market at that instant.

DIA has spent more than a week pussyfooting with the 216.01 'secondary' Hidden Pivot shown (see inset), unable to muster the modest finishing stroke it would take to reach a corresponding rally target at 217.45.  This is tired price action, but also quite tiresome for anyone who would attempt to catch a profitable ride.  For now I'll suggest two possibilities: getting short if 217.45 is hit, or long if DIA pulls back to the green line at 213.14. In either case, you should use near-the-money-options with at least one week left on them but fewer than three weeks. Thus, if 217.45 were to be achieved by, say, Wednesday, you would buy four August 8 217 puts; or at 213.14, four August 8 214 calls.

A sharp rally on Friday pushed DIA to a 216.68 peak that exceeded the target we'd been using by six cents. You could have shorted there with a tight stop-loss, but I won't establish a tracking position unless I hear from at least two subscribers who used the pivot to open a position.  Profit-taking would have been in order on the ensuing pullback to 216.20. Regardless of whether you hold a position, you should keep in mind that a move above Friday's high would put an alternative target I'd given at 217.21 in play.  You can short there aggressively with a stop-loss as tight as a dime if you've been long for at least a portion of the ride up.

I proffered rally targets as high as 230.08, or even 269.40 in my last tout, but we'll lower the bar a bit just to be cautious. Mainly, it's a case of the FAANG/lunatic stocks having difficulty making headway and providing no leadership for the broad averages recently. The nearest significant Hidden Pivot resistance for this vehicle lies at 217.67, equivalent to a DOW rally of a little more than 300 points, and we should trade with a bullish bias until it is reached.  There have been no 'mechanical' buy signals as yet, but we can respond to the opportunity intraday if this occurs. Stay tuned to the chat room if you care. The target is sufficiently clear and compelling that we should have no qualms about getting short there -- tightly stopped -- if and when it is reached._______ UPDATE (July 9, 6:06 p.m. EDT): Last week's thrashing and flailing generated a bullish impulse leg that is additive to the larger pattern projecting to 271.67 noted above. However, traders who used the smaller pattern to  generate a buy signal would have been stopped out three times trying to get off the launching pad. DIA tripped yet another buy signal at 213.86 on Friday off these coordinates on the hourly chart: A=211.70 (6/29), B=215.38, and the signal would grow in significance if there's a follow-through on Monday that exceeds p=214.78, a midpoint Hidden Pivot tied to a target at 216.62.  We'll let DIA tell us how it's feeling before I provide further trading guidance._______ UPDATE (Jul 10, 7:03 p.m.): The intraday high fell slightly short of my 214.78 benchmark before dropping back into a shallow correction. We'll give the uptrend another day or two to either fly or die, but the longer DIA hovers, the more likely the next move of

We began the day bidding for put options but backed away when DIA opened strong and forged higher. I now expect this vehicle to reach the 230.08 target shown. This is a major Hidden Pivot resistance, and although it's possible to extrapolate even higher projections up to 269.40 from the monthly chart, the pattern I've selected looks more likely to produce the major top we've been looking for.  At the very least, it should produce a tradeable top, and that's why we must be prepared to get short there with a stop-loss as tight as 1.00 point. How long might it take? My guess is three to  six weeks, judging from the dramatic way the bull market's trajectory has steepened since this phase of it began in August 2015.  If the target were to be reached in just three weeks, the implied 1600-point rally in the Dow would effect a blowoff worthy of the name.  We should be ready for it regardless, but in the meantime any swing trades we initiate should be from the long side. You should stay tuned to the chat room in real time if you're interested, since getting aboard with risk under tight control, presumably using 'camouflage' entry set-ups, will require very close attention to the lesser intraday charts.