DIA

I'd flagged a Hidden Pivot target at 178.23 as a promising place to try to get short, but we might also test the water at the trendline shown, since it looks likely to show some stopping power. The resistance will come in at around 176.62 on Tuesday, and you can initiate the short by buying four April 8 176 puts with DIA trading between 176.55 and 176.68. This is a day order, and the puts would be a good buy for perhaps 1.00-1.10 with DIA trading in the stipulated range. ______ UPDATE (March 29, 2:32 p.m. ET):  Lower the bid for the calls to 0.85-0.90, day order, but don't pay up. Stop yourself out of the calls if they trade for 0.65. _______ UPDATE (6:36 p.m.): We'll back away from the trade, since the calls picked up just enough volatility on the close that we'd no longer be stealing them if they come. That's still possible on the opening rotation, when the market makers get to rig the spread, but even then it would be tricky business for us to be go-along buyers.

If DIA completes the bullish pattern shown, there's an implied 300-point rally just ahead. Ordinarily, our focus would be on getting short at the 178.23 target. Although we will be looking to get short somehow, we should allow for the possibility of a top that falls shy of the target. Accordingly, our first order of business will be to get long, the better to build a profit cushion for when we reverse the position. We can do so with a mechanical bid at 175.75, stop 174.92, to be activated once the  secondary pivot has been exceeded by at least 0.75 points for three bars. This is what I call a 'mechanical' trade, and I will signal it in the chat room and via an email alert if the opportunity develops. If you prefer to use options instead of stock, stick to near-the-money calls with two to three weeks left on them. The rules governing 'mechanical' trades are proprietary, but I've sketched this one hypothetically so you can get a rough idea of how to proceed.

Although I am currently tracking a winning short position in the E-Mini S&Ps initiated a single tick off the recent high, the corresponding trade I'd wanted to attempt in this vehicle was not to be.  It would have worked if we had simply shorted DIA at the time the E-Mini trade went off. But there was no Hidden Pivot reason, at least none that I can discern, to have shorted DIA itself at the recent top. Moreover, even though we've determined to swing for the fences with the short position in the E-Mini S&P, DIA would actually become a moderately enticing 'mechanical' buy if it pulls back to the red line (i.e., p=173.27). Regardless, because I am trying to come up with 'market' shorts for those of you who don't trade futures, I'll continue to look for opportune spots to attempt it in vehicles such as this one.  Stay tuned!

We should want to fade rallies that occur for no good reason, and so I'll suggest shorting this vehicle tomorrow using the fetching Hidden Pivot target shown, at 174.66. Wednesday's effusion on Wall Street was triggered by the latest drivel from the Fed, which caused knee-jerk investors and assorted other imbeciles to dive into stocks, even if they thought twice about selling off T-Bonds.  The 174.66 target looks good enough for me to suggest foregoing the usual, penny-ante stop-loss. The risk, as far as I'm concerned, lies not in having this hoax run against us to any significant degree, but in missing the trade because the rally has fallen short of the target. Accordingly, I'll suggest buying four March 30 174 puts if and when the target is closely approached. I estimate that they would be a great deal for 1.35-1.45 at that time. Traders familiar with my proprietary 'camouflage' entry technique should look to short the stock (ETF) with DIA trading anywhere between 174.15 and 174.66. This range allows for the possibility the rally could stall at 174.27, the Hidden Pivot target of an alternative pattern.  A 'camouflage' entry would use a downtrending abc pattern on the very lesser charts to trigger the trade. As implied above, we should give this speculation a little more room than usual, and that's why I'll recommend putting the stop-loss at 174.87. That might not sound like much, but with a pattern as clear as this one, we should expect a tradable top to occur within perhaps 0.03 to 0.05 points of the target.  Any more than that would be warning bears to get out of harm's way by letting a manifestly wacky buying spree run its course. _______ UPDATE (March 17, 6:59 p.m.): The short was stopped out for a small loss,

Short this bluff at 174.66 if it gets there -- or more aggressively at 173.07, stop 173.16, if 173.07 is hit in the first 30 minutes of the session. You can use put options if you prefer, but I'd suggest at-the-moneys that expire in three week or less. If the order fills and goes in-the-black, sell puts of a lower strike against those owned to produce a $1 bear vertical put spread for 'even' or a small credit. ______ UPDATE (March 16, 12:10 a.m. ET): No change, but please note that a short from 173.07 has become slightly more risky because of yesterday's pullback from a high on Monday that fell shy of it. (Pivoteers may also have noticed that the subsequent pullback would have produced a painless mechanical buy and a profitable ride, since the intraday low -- on the opening bar, as it happened -- occurred just 16 cents below p=171.48.) 

The bullish pattern shown could yield an entry opportunity with the potential to leverage a Dow rally of as much as 600 points over the next week or so. I've discussed this in detail in the E-Mini S&P analysis immediately below, but I want to provide an equity-  or option-based alternative for subscribers who are not set up to trade futures. Although the impulse leg in this instance did not surpass the required 'external' peak, we'll set aside the rule because the rally is so clear and compelling in the S&P chart. Note that there is no 'buy' signal here, at least not yet. The pattern is still unformed, with a point C low that is only tentative so far. We'll continue to monitor it closely, however, since it could get us aboard a big move with relatively little entry risk. Tune to the chat room for further guidance in real time. _______ UPDATE (March 1, 7:48 p.m. ET): Because there were no reports from subscribers having taken the trade suggested above, I have not established a tracking position. There was a second entry opportunity toward the end of the day when DIA pulled back to the 168.20 midpoint pivot shown in the chart. My minimum objective is 169.82, the secondary pivot, but D=171.44 would be in play if 169.82 is decisively exceeded. ______ UPDATE (March 11, 2:20 a.m.): This morning's bull-trap, gap-up opening came within 4 cents of the 171.44 target I'd said would be in play if 169.82 were exceeded. There was no tracking position for this one, however, since no subscribers reported taking the trade. DIA will come off the sheets on Monday unless I hear from someone who got short near Thursday's peak.

The bullish ABC pattern highlighted in the chart is so fetching that I would use it to teach fine points of the 'camouflage' entry technique. The stubby little impulse leg masks the underlying power of the rally, which has exceeded the two prior peaks -- one internal, the other external -- as required. Now, if a point 'C' low were to form in the approximate range 162.80-163.05, turning the set-up into a picture-perfect 'counterintuitive' entry opportunity, don't hesitate to get long at 'X'. If you use options and the trade goes our way, try to leg into 'free' $1 vertical call spreads the first chance you get.______ UPDATE (February 24, 8:30 p.m. EST): Stocks fell hard at the opening, and although they later reversed to close 'green', the trade outlined above never triggered.

Although my short-term outlook for the E-Mini S&Ps is bearish, this vehicle's hourly chart makes a good case for an upswing to end the week. Accordingly, I'll recommend a 'mechanical' bid at p2=164.18 if that Hidden Pivot is exceeded for 2-3 bars by at least 60 cents. Reverse the position and go short at 165.72, stop 165.86.  If you use put options to do this, I'd suggest buying the 165 strike with a Feb 19 expiration.  Stop yourself out if the options trade for 30 cents less than you've paid for them.______ UPDATE: The opportunity died when the futures headed sharply lower from the get-go.

I neglected to put a cap on the Feb 26/Feb 12 150 put spread Friday, but its purpose was to get us short at the Hidden Pivot target of a relatively modest rally, not to jump in the path of a speeding freight train. Be that as it may, I'll suggest using a 0.20 stop-loss for the four-lot position, meaning you should bail out on a 0.20 offer if it looks like the spread is trading easily at that price. For future reference, the same rule of thumb applies when you are bidding for options: If they come too easily, you are bidding too much.  Option trades offered herein are typically not going to offer the juicy odds and precise risk control we get buying stock or futures using straight limit orders or 'camouflage'. Although puts and calls, with the leverage they offer, 'seem' like low-hanging fruit, I'd suggest that you trade the mix of ideas and styles offered in my touts and in the chat room rather than focus on just the option trades.  When in doubt about how to price them, you can set bids for options using Hidden Pivot targets rather than trying to guess. Meanwhile, the chart shown is for the underlying vehicle, DIA.  It says that if p2=164.36 is exceeded even by a little bit on Monday morning, that D=166.32 will be reached. You can short there with a tight stop -- much more aggressively if you are long for the implied 200-point Dow rally to it.