DIA

The pattern shown is pretty enough that I'll suggest bottom fishing if and when DIA gets within a few ticks of the 175.63 target.  Buy eight March 20 178 calls, using the stingiest bid you can get away with.  I cannot estimate it within 0.05 a day in advance, but you'll be able to determine a fair price yourself by simply monitoring changes in the option bid/asked as DIA approaches the target. Stop yourself out if the options trade for 12 cents less than you've paid for them. I usually take the worst price reported by a subscriber as the official price when establishing a tracking position, but this time I'm going to encourage a little competition.

Two weeks ago, with DIA trading around 177, subscribers acting on my instructions bought 16 March 27/Feb 27 185 calendar spreads for 0.48. The rally since has nearly doubled the value of the spread, and so I've advised selling ten of them so that you still hold six spreads, effectively for no cost. Now, bid 0.01 to cover the short Feb 27 calls. If successful, we'll hold six 'free' March 27 185 calls for a swing at the fence.  If you are able to buy back the calls, offer six March 27 187 calls short for 2.00, good till further notice. ______ UPDATE (March 2): We continue to hold six March 27 185 calls effectively for nothing. Filling the short offer is unlikely at the moment, but you should keep trying, since the sale carries no risk. _______ UPDATE (March 2, 7:41 p.m.): It would take a rally of a little more than 300 points, to around 18600, to get us filled, but we can afford to be patient for a while longer. True, our ambitious goal will grow more difficult as time premium erodes the value of the March 27 187 calls we're trying to sell short. But if the pace of the rally slows, we can always just cash out of the calls we continue to hold. They are currently trading for 0.70, implying a $420 paper profit on the position. ________ UPDATE (March 9): With no risk in the position and 18 days to go, we'll go for broke.

I mentioned the 184.63 rally target shown during an 'impromptu' session, but this is the first time I've displayed it formally in a tout. Because of the clarity of this pattern, it makes for a very compelling price objective. Moreover, the pattern is gnarly enough, with poor symmetry and plenty of nasty chop, that we might expect the target to work very precisely because not everyone sees it.  We do, however, and it is ample reason to gear up for some aggressive shorting if and when 184.63 is closely approached. There is 600 Dow points of implied upside, and so there is also good reason to trade now with a bullish bias. For now, I'll recommend bidding 0.48 for 16 March 27 185/Feb 27 185 call calendar spreads. This is a day order, valid if DIA is trading above 178. _______ UPDATE (Feb 10, 11:57 a.m.): Several subscribers have reported doing this trade, so I'll track 16 calendar spreads @ 0.48. It is currently quoted at 0.34/0.51, but it's not too early to try to roll the spread forward, buying back the short Feb 27s for as little as 0.04 while shorting the March 6 calls for as much as 0.16.  Accordingly, I'll advise selling the March 6/Feb 27 185 calendar spread for 0.10 or better, day order. This order will become easier to do if DIA continues to move higher. Obviously, though, a significant payoff will require quite a rally between now and March 27, when the long side of our position expires. In the meantime, we can continue to reduce the cost of the spread by shorting weekly options successively against the March 27 calls we'll continue to hold. With DIA at higher prices, we'll be looking to take in not a mere dime when doing the roll,

Tuesday's progress above the 174.89 midpoint resistance shown was scant, but bulls get the benefit of the doubt nevertheless because the pattern that produced the pivot is so clear. Trade with a bullish bias if DIA is trading 175.40 or higher in the first hour, but I'll further suggest reversing the position and going short if the 176.64 target is achieved. _______ UPDATE (January 25, 10:52 p.m. EST): Any short position taken would have been short-lived, since DIA turned out to have been on its way to a top 178.14.

The chart shows Hidden Pivot supports equivalent to the ones I've identified today for the cash DJIA.  This is for purposes of bottom-fishing at either price, or perhaps both, using out-of-the-money call options.  I suggest using four December 12 178 calls if playing for a bounce from the higher pivot (177.19), or 177 calls if from the lower (176.36). The first opportunity would obviously be a non-starter if DIA opens below p=177.19.  We should plan on holding this position, and spreading off calls of a higher strike to create a costless vertical spread, within hours, so be prepared to stop yourself out for a loss of perhaps 0.15-0.20 per call if the trade does not go instantly our way. _______ UPDATE (2:08 p.m.): The pullback went no lower than 177.68, negating our bottom-fishing plans.

A Hidden Pivot rally target at 178.47 has kept us on the right side of the rally, although it has been our intention all along to reverse any long positions initiated along the way and get short when the target is reached.  I've readjusted it down to 177.63 based on the pattern shown, and will now suggest bidding 1.20 for sixteen December 5 176 puts, stop 1.10, good through Thursday. The bid is frugal but reasonable, but you should stay tuned to the chat room in case we need to adjust the price on-the-fly. _______ UPDATE (10:15 p.m.): Wednesday's gratuitous dipsy doodle did nothing to diminish the value of the 177.63 target flagged above. We'll stick with the plan.______ UPDATE (November 13, 6:40 p.m.):  Options on this vehicle are too thinly traded to bother with. Instead, I'll suggest shorting the stock in the range 177.54-177.63.  The lower number is a Hidden Pivot resistance associated with a new rally pattern created yesterday. You should risk no more than 10-15 cents per share on the initial stop-loss. _______ UPDATE (November 20): Check out the DJIA tout above, since it contains an actionable play in this vehicle. _______ UPDATE (November 21, 9:55 a.m. EST): DIA popped to 178.60 this morning, slightly above the adjusted target given in the $DJIA tout above, but I'm still waiting to hear from subscribers who bought puts before I establish a tracking position. _______ UPDATE (November 21, 4:00 p.m.): Quite a few subscribers were able to get short in timely fashion,  including one apparent heavy hitter who reported buying 50 December 5 178 puts for 1.10. Any puts acquired with DIA trading near the 178.47 target provided in today's DJIA tout would have produced a winner, since my target caught the 178.60 peak of an opening-bar short-squeeze within

Use the 172.13 Hidden Pivot shown as a minimum upside objective for the next couple of days. Most immediately, and obviously, the target will be useful for staking out a long position. However, because the pattern itself is a good-looking one (albeit gnarly), and because the precise pullback to the midpoint pivot has confirmed the target, 172.13 will also work for shorting with a very tight stop-loss. You can do so using stock or options, but please query me in the chat room if there's a problem. ______ UPDATE (8:38 p.m. EDT): Shorting the 178.47 target shown looks like a juicier (and less risky) bet than the one I'd proposed, but we should still take the odds getting short at 172.13.  Accordingly, I'll recommend buying two Nov 7 171 puts if and when DIA gets with 0.04 of the target. A price of around 0.50 would be doing pretty good in the first hour, but time premium will be melting away as the day wears on, so don't pay up.  You should stop yourself out if the puts trade for 0.20 less than you paid for them. _______  UPDATE (8:15 a.m.): The stunning short-squeeze gap overnight has negated a short from 172.13, since, when options begin to trade, DIA will be more than a full point above that number.  The higher pivot at 178.47 now obtains, but it could be difficult to catch a ride, since "everyone" will by now be hugely bullish -- most particularly short-covering bears.

The 167.77 rally target we've been using is still valid, although yesterday's bend in the road has made it somewhat less enticing as a place to try shorting with a tight stop-loss. Thursday's rally was not bullishly impulsive because it merely tied the 10/10 peak, but the pattern could yield an attractive opportunity to get long nonetheless, especially since I've been featuring "illegitimate" ABCs like this one as an alternative to a standard-issue pattern that has attracted too much riff-raff, particularly the algo traders. Barring some horrific headline overnight, your bias should be bullish, using an entry signal off the pattern shown. If you want to further reduce the entry risk, drop down to a lesser chart for your entry signal. I'll be in the chat room in any case if your unsure of how to proceed. Be ready for a stall at p=167.74, since it closely coincides with the 167.77 target of the larger pattern. ______ UPDATE (October 27, 2:41 a.m. EDT): DIA peaked Friday at 167.79, two cents from our rally target, so you should be mostly out of any long positions held on the way up. If you made money and reversed the position at the target by buying out-of-the-money put options, I'd suggest stopping yourself out if they trade for 0.15-0.20 less than you paid for them.

The calendar spread I'd suggested buying yesterday for 0.20 was out of reach at the opening bell, since the Dow began the day on a powerful gap higher, up more than 100 points. The spread was tough to buy even for 0.60 at the close, and although it could widen to $1 or more, I won't suggest chasing it. Instead, let's try to get short when our original rally target at 167.05 is reached. You should bid 0.90 for four Nov 7 164 puts, contingent on DIA trading 167.10 or lower.  This is a day order, and you should stop yourself out if the puts trade down to 0.70. Cancel the order if DIA exceeds the target by more than 0.10.  Note as well that a pullback to the 164.65 midpoint pivot would be a speculative "buy". _______ UPDATE (8:20 p.m.): The rally died around mid-session, 82 cents shy of our target. Some in the chat room reported getting short anyway, and the trade looked pretty good at day's end. To those who took a short position home, I'll suggest taking a partial profit asap and using an impulsive stop based on the 5-minute chart. That implies exiting on a rally that gets past the two labeled peaks without correcting in b-c fashion once above peak #1.  _______ UPDATE (October 23, 1050 a.m.): This morning's vicious short squeeze began within a gap to a 166.03 Hidden Pivot midpoint, where DIA consolidated. This implies DIA is headed to exactly 167.77, where a tradable top seems extremely likely. (And, of course, the rally is tradable as well.)