DIA

Although a 204.05 target that I proffered here earlier has yet to be reached, it's time to hang out an even more ambitious one at 209.50. The relevant pattern (see inset) is a pretty good one, even if the elongated A-B segment cries out for a more substantial point 'A' low. Note that a 'mechanical' buy at the red line would have produced a nice profit with almost no pain. Under the circumstances, I'll recommend the same play from p2, using a stop-loss at 189.86. The target is close to the one at 21,101 that we've been using for the cash DJIA for nearly three weeks. As such, it looks appealing as a place to get short. I won't recommend doing so, however, unless you've caught at least a part of the ride north. Since it's possible DIA won't retrace to our bid, you can substitute a 'camouflage' or 'counterintuitive' entry on a chart of lesser degree to increase your odds of getting aboard. That would also reduce the theoretical entry risk of $491 per round lot. _______ UPDATE (Jan 8, 11:55 a.m.):  If DIA continues to show no inclination to pull back to our niggardly bid, we may try another entry tactic. Currently, I'm watching the 30-minute chart for 'camouflage' opportunities._______ UPDATE (Jan 10, 8:24 p.m.): I've refreshed the chart to show how a 'counterintuitive' buying set-up could take shape on Wednesday, affording us a speculative opportunity to test the water with a relatively low-risk entry. I'll make this catch-as-catch-can, since I cannot foresee exactly what will happen, or how it might affect the idealized game plan I've sketched.  _______ UPDATE (Jan 11, 8:58 p.m.): Counterintuitive trades are 'half-working' in a way that I've detailed in the latest E-Mini S&P tout. If there's a payoff for staying awake, it

The tiresome oscillations of the last two weeks have lacked the kind of targeted thrusts that might have made shorting this vehicle a piece of cake. Assuming no such easy opportunity materializes on Friday, the final trading day of 2017, I'd still prefer to take a few puts home over the long weekend -- just for the heck of it. Yes, stocks could open with an insane leap higher in the first few days of the new year, as they often have. But my gut feeling is that a downbeat start is at least somewhat more likely. That said, I just don't have it in me to simply pay up for some puts, come-what-may. But I will, however, recommend bidding 0.35 for four Jan 6 198 puts, day order. The bid is based on the 0.29 Hidden Pivot target for this option shown in the chart (see inset). Consider it a lottery ticket if the order fills.

Wednesday's wilding spree allowed subscribers to close out all but one of eight Dec 9 192.50 calls purchased on November 21 for 0.34. The intraday high for the options was 3.05, but as is my practice, I'll use the worst price reported by a subscriber (2.35) to calculate the gain on the position so far: $535. To recount the details since Nov. 21: two contracts were to have been exited at 0.68; two more at 1.12 (with 1.06 used as a basis); two at 1.28; and one more (today) at 2.35. If subscribers were to cash out the single remaining contract at Wednesday's closing price of 3.05, the total profit on the position would be $840. Some subscribers may have done better, since they reported having done the trade using a multiple of the eight contracts initially specified. With respect to the last contract, I'll recommend offering it for 5.15, good-till-canceled. That price is pegged to a 19727 DJIA target that I first broached here a month ago, when the Dow was trading 1000 points lower.  Watch for updates, however, since exiting the calls at the best possible price could be tricky if we have to do it on Friday, when the options expire. My instructions for this trade have been detailed and explicit because the trade was intended in particular for subscribers who have never had a winning option trade. _______ UPDATE (Dec 8, 1:17 p.m. ET): ES 2250 and DJIA 19727 are targets somewhat out-of-synch, as you will have surmised. To play it conservatively, I'll suggest cashing out the last DIA call now. They are quoted at 3.95/4.20, so offer them at 4.05, or in-between the bid and offer if they shift higher or lower. _______ UPDATE (9:42 p.m.): Acting on an intraday alert, subscribers blew out the

Moderate strength in the Indoos allowed subscribers to take profits Thursday on two more DIA Dec 9 192.50 calls. Eight of them (or a multiple thereof) had been acquired on November 20 using a 0.34 limit bid.  Subscribers were subsequently advised to sell half of the options when their price doubled to 0.68; with yesterday's sale of two more for 1.06, they now hold a position that will yield a $212 profit even if DIA plummets between now and Dec. 9 when the options expire. The potential gain is unlimited and would grow by $200 for each one-point move above 192.50. (DIA closed on Thursday at 191.95.)  Trading note: We used a Hidden Pivot target for the options (see inset) to determine a target price for them of 1.12 -- the high of the day, as it turned out.  Not all subscribers were able to exit at that price, however, and that's why I have used some so-so fills that were reported to calculate a new cost basis for the position. Rick's Picks tracks trades only if subscribers have reported fills. P&L is similarly based on actual subscriber results, with gains or losses skewed toward worst-case reports. _______ UPDATE (Dec 5, 8:54 p.m. ET): We'll play this one down to the wire, since we stand to make at least a small profit even if DIA dies in the stretch between now and Friday.  Just in case bulls generate a fleeting spike, however, I'll recommend offering one of the two calls [Correction: offer two of the four contracts still held] for 1.28, good till canceled. _______ UPDATE (Dec 7, 1:40 p.m.): Subscribers reported exiting two more contracts for 1.28 as suggested above. Imputing the gain to the two contracts we still hold gives them an effective cost basis of minus $1.08

Based on actual fills reported by subscribers, I am tracking eight Dec 9 192.50 calls with a cost basis of 0.34. Originally I'd suggested spreading them off against some short 194.50 calls, but I'll now recommend simply offering half of them to close for 0.68, twice what we paid. If successful, we'll hold half of the original position effectively for free. On the daily chart, DIA projects most immediately to 191.02, a 'secondary' Hidden Pivot, and I doubt it will have trouble getting there. Judging from the way buyers blew past the 186.90 midpoint Hidden Pivot, then consolidated above it, the 195.15 target looks like a very good bet to be reached. If so, it implies an impending rally of nearly 600 points in the Dow Industrials. ______ UPDATE (Nov 22, 8:29 p.m. EST): If you did he trade described above you'll need to stay alert, since another moderate leg up like Tuesday's will likely get us filled on the sale of half of the position. This trade was intended for all subscribers, including relative option novices, since it began with a straight limit-bid for the calls. ________ UPDATE (Nov 27, 10:15 p.m.): The calls traded as high as 0.85, allowing anyone who did the initial trade to exit half the position for twice the original price. Assuming four contracts are still held -- with an effective cost basis of zero --  I'll now recommend offering a single contract to close for 1.36, four times the original cost.  The order should be marked good-till-canceled.

DIA has blown past the midpoint Hidden Pivot at 186.90 with such force that there's little doubt it will achieve the 195.15 target (see inset). Although I am usually reluctant to buy call options except when the underlying vehicle is at a targeted, corrective low, we can put in a stink bid and cross our fingers:  Bid 0.34 for eight Dec 9 192.50 weekly calls, day order. FYI, I am using a Hidden Pivot pattern that projects a 0.32 low on these calls. They closed Thursday at 0.42, down from a recent high of 0.56 on November 15. If the order fills, we'll try to spread off the risk by shorting 194.50 calls later for 0.34 or more. ________ UPDATE (Nov 20, 10:16 p.m. EST): Numerous subscribers reporter filling the order, so I'll track eight Dec 9 192.50 calls with a 0.34 cost basis.  For now, offer eight Dec 9 194.50 calls short against them for 0.34, good till canceled. ________ UPDATE (Nov 21, 12:30 p.m.): Turns out there are no 194.50 calls, so we'll use the 195s instead.  Do nothing for now, but stay tuned for updates.

The broad averages have made no headway for nearly two months and are looking heavier by the day. Although we should have no illusions about timing the onset of the Big One, we can still prepare for it without taking much risk. Accordingly, I'll suggest buying the Oct 21 200 - Sep 16 199 put spread eight times for a 0.57 debit. This is a slightly vertical calendar spread with a bearish bias and a maximum payoff if SPY falls to 200 between now and October 21. The idea behind the strategy is to bide our time waiting for the Big One, paying for our long puts by shorting weekly puts against them every Friday. We will do so by rolling the spread forward each week. This means that on September 16, we'll cover the short Sep 16 puts (i.e., buy them back), presumably for 0.01-0.02; at the same time, we'll short an equal number of Sep 23 199 weekly puts. By rolling the calendar spread as described, we'll retain our monthly Oct 21 puts while always being short more-rapidly-decaying weekly puts against them. Ideally, if SPY falls toward 200 over the next few weeks, we'll receive higher and higher prices for the puts that we short.  With any luck, SPY will drop to 200 over the next six weeks, and the Oct 21 200 puts we've held all along will effectively have cost us nothing.  For now, you can bid 0.57 for the spread eight times, good till Thursday and contingent on SPY trading 218 or higher. If you find the above even slightly confusing, DO NOT ATTEMPT THIS TRADE.  There will be other chances to try similar strategies in the future, but you should watch from the sidelines the first few times in order to gain experience. Note

Since last Wednesday, the Dow has sold off moderately from within a nickel of the 180.23 midpoint Hidden Pivot shown. That doesn't necessarily mean the bull market is over, but it does raise a yellow flag. Accordingly, we'll need to pay close attention to minor, downtrending abc patterns, since, if they start overshooting their 'd' targets, that would imply the selling is gaining in strength. The first such pattern relevant to this concern is shown at the rightmost edge of the chart (see inset). Since the midpoint support at 176.28 looks unlikely to hold, you should consider shorting from that price using June 17 175 puts. Pay no more than 0.27 for them if DIA is trading for 176.60 or less, but you can lower the bid by a penny for each 4-cent move in the underlying above 176.60. Since the puts have just hours left before they expire, work this order only until 11:30 a.m. EDT. I'll also recommend reversing the position and bottom-fishing if D=174.78 is hit or approached within three cents.  Use Jun 24 175 calls for this purpose, and report any fills in the chat room so that I can establish a tracking position. _______ UPDATE (June 16, 10:50 pa.m. EDT): Not a single mention of DIA in the chat room this morning!?  It has plunged to within two cents of the 174.78 target given above, then reversed for a very tradable, 52-cent gain. I had provided VERY detailed, explicit trading instructions because this opportunity was meant for everyone, including rookies and new subscribers. Did anyone get a piece of it? If so, please speak up so that I can establish a tracking position.

If DIA pulls back for a couple of days without moving above today's high (see inset), it could set up  the kind of 'camouflage' trade that would allow even relative novices to get long using stock or options with risk tightly controlled. The still-developing ABC pattern has an A-B leg that is appealingly subtle because it barely surpassed the visually obvious 'external' peak at 179.27 (#2) recorded on May 10. This makes it look like a double top to many traders and chartists, although we and the Elliott Wave guys see it properly as the impulse leg of a rally that promises a tradable follow-through (i.e., C-D) leg. I will signal an entry in the chat room if the pattern develops like the one shown. _______ UPDATE (June 7, 7:06 p.m. EDT): DIA pushed higher before dropping back to close with a modest gain. This will likely have drawn more bullish attention than we should want, although we may still be able to use a 'conventional' entry trigger to get long. It would still require two more days of retrenchment, however, to set up the trade. A further possibility would be for the rally to push above yet another 'external' peak -- specifically, the one at 180.65 recorded on 4/27 (see inset, a new chart). That would make p2=183.51 an odds-on bet to be reached while putting D=186.70 in play as a target for next week.