DIA

The chart shown corresponds to the one displayed alongside today's DJIA tout. I offer it for the guidance of those who want to bottom-fish. I would suggest using somewhat-out-of-the-money call options that sell for under 0.80.  Also, you should buy options that expire this Friday, since, if we're going to be right, the position should show a profit within minutes of the trade. Keep your bet small unless you are very nimble or really know what you're doing.  I say nimble because the trade could be tricky if 163.69 is hit in the fist minute or two of the session.  You should stop yourself out if the calls trade for 0.15 less than you paid for them. ______ UPDATE: Not a word about this trade in the chat room, so I'll assume nothing was done. Regardless, with DIA having fallen to as low as 162.84, you should be out of the trade,

I'm tracking four Oct 10 167/169 put spreads for a 0.05 CREDIT, based on subscriber feedback left in the chat room. Traders were able to leg on this position at very favorable prices using a rally target at 171.10 sent out Monday night. It precisely nailed an intraday peak on Tuesday at 171.10, triggering a recommendation to buy the 169-strike puts, and then to spread them off yesterday morning by shorting 167-strike puts after DIA had fallen sharply. We'll put the position on autopilot for now, since it cannot lose -- will in fact produce a profit of $20 no matter what DA does, but with potential to serve up an $820 gain if DIA is trading below 167 come next Friday. For your interest, and to help you determine whether you could have followed my instructions, here is the recommendation exactly as it went out: "We’ll monitor this vehicle more closely for low-risk shorting opportunities in the days ahead. Let’s warm up with an order to buy four Oct 10 169 puts if and when DIA gets within 0.04 of the 171.10 target shown. I estimate that the puts will be trading for around  0.75 then, but you can refine the bid as warranted by training on the bid/asked when DIA gets to 170.90.  We’ll risk a theroretical $80 on this one, stopping ourselves out of the puts if they trade 0.20 below where bought."  _______ UPDATE (October 6, 2014): Friday's short squeeze has gutted the spread, but it could have been cashed out for two thirds of its maximum potential value last week when DIA briefly dipped below 167 to a low of 166.43.  Reports, anyone?

The 171.10 rally target we used for this vehicle yesterday caught the intraday high precisely to-the-tick. This allowed subscribers to buy Oct 10 169 puts as suggested for a reported 0.75, the low of the day. Toward the end of the session, with DIA trading significantly lower, I suggested spreading off the risk by offering four October 10 167 puts short for 0.60.  The order went unfilled (although some tightwad put up a 0.59 bid in the closing seconds). Now, I'll suggest offering the calls short for 0.80, a price that I might suggest raising if it looks like stocks are going to open with a big thud. If the order were to fill at 0.80, our vertical-spread position would produce a gain of at least $20 no matter what, but with upside potential to $880. My reasoning behind this strategy is that the Ebola scare may already have reached the threshold of "tradable event."  This I have surmised from the rapt attention the story commanded at my gym, which has TV monitors in all of the workout rooms. Whatever happens, we can only pray that there has been no spread of the disease by the man now under close watch in a Dallas hospital. However, because the possibilities that might arise from this developing story are almost too scary to imagine, we should treat it as an event that could have a significant impact on financial markets. _______ UPDATE (At the opening): Bring the offer down to the original 0.60 for the short puts. _______ UPDATE (9:59 a.m.):  No trades recorded yet, but with the puts now 0.93 bid/1.07 asked, I'll score this as a short sale at 0.80 unless I hear from someone in the chat room who did worse.

We'll monitor this vehicle more closely for low-risk shorting opportunities in the days ahead. Let's warm up with an order to buy four Oct 10 169 puts if and when DIA gets within 0.04 of the 171.10 target shown. I estimate that the puts will be trading for around  0.75 then, but you can refine the bid as warranted by training on the bid/asked when DIA gets to 170.90.  We'll risk a theroretical $80 on this one, stopping ourselves out of the puts if they trade 0.20 below where bought.  ______ UPDATE (2:50 p.m.):  A dead-center bullseye here, since my tout -- sent out last night -- caught the high of today's fake-out rally exactly to-the-tick. If you got short as I'd suggested, please let me know in the chat room and I'll establish tracking guidance. _______ UPDATE (3:44 p.m.): A fill at 0.75 was reported (somewhat belatedly) in the chat room, so I'll now recommend shorting four Oct 10 167 puts for 0.60 against the four held. ______ UPDATE (4:04 p.m.): Some cheap fool was bidding 0.59 for the calls at the close. Let's offer them for 0.68 when they open Wednesday morning, assuming index futures haven't fallen by much overnight. If they have, adjust the offer accordingly.

A Hidden Pivot resistance at 175.89 corresponds to the very long-term target at 17622 that we've been using for the cash Dow index.  Although our short position (four Nov 122 150 puts) was stopped out yesterday at 0.30 for a position loss of about $80, we can try to recoup this by 1) getting long enroute to the target, and 2) shorting aggressively when it's reached.  We'll need to work the first trade in the chat room in real time, since it's always going to be tricky getting long a bull trend as mature as this one. Getting short should be a piece of cake, however, since we need only buy put options if and when the target is very closely approached. Accordingly, I'll suggest buying a dozen Oct 31 167 puts with DIA trading within 0.08 of the target. My guess is that the puts will be trading for around 0.55, but you'll need to refine that by monitoring the bid/asked spread when the target gets close. Stop yourself out of the puts if they trade for 0.20 less than you paid for them. ______ UPDATE (September 22, 1:52 a.m. EDT):  It may not be such a piece of cake after all, since stocks are falling Sunday night with this vehicle having gone no higher than Friday's bull-trap peak at 173.13 (on the opening bar). We'll put the order aside for now.

Earlier, I had suggested buying Nov 22 150 puts if DIA hit a Hidden Pivot rally target at 171.67.  Yesterday, the stock head-faked to an all-time high at 171.57 before recceding sharply to 170.22, but our lowball bid for the puts stayed just out-of-reach. Let's try again, but without being so niggardly: bid 0.47 for the puts, good for the first 10 minutes of the session; then, if the order has not been filled, work it with the goal of buying midway between bid and offer.  Wherever you buy the puts, assuming you do so for 0.50 or less -- my limit here -- stop yourself out of them if they trade for 0.20 less than you paid.  ______ UPDATE (Sep 7, 10:20 p.m. EDT): The puts opened at 0.54 and traded as low as 0.47, but I'll use 0.50 as a tracking price. As suggested above, you should stop yourself out if they trade for 0.30.  Against that offer, and on a good-till-canceled basis, offer four Sep 30 150 puts short for 0.20. _______ UPDATE (Sep 18, 1:15 a.m.): The puts traded as low as 0.33 yesterday, so be prepared to get stopped out. I'd suggest using a 0.30 stop-limit for the first 30 minutes or so, since put sellers could get raped if DIA opens even moderately higher.

The Diamonds have come so tantalizingly close to the long-term Hidden Pivot target shown, 171.67, that we should probably do something, anything, just in case a major top is forming. Accordingly, I'll recommend bidding 0.42 for four Nov 22 150 puts, day order. This is highly speculative, so don't bet more than you might care to lose. _______ UPDATE (Sep 3, 8:41 p.m. EDT):  Our bid went unfilled; however, when buying options, especially put options, and most especially when the bull is dominant, the appropriate response is to keep lowering our bid until we get filled. According, let's try bidding 0.36 for six Nov 22 150 puts.  The bid is loosely pegged to the 171.97 target shown, although there's always the possibility the pullback we expect will come from p=171.25.

The Diamonds took a manic leap on the opening, then slithered higher for a couple more hours before reaching a 168.02 Hidden Pivot rally target that has kept us properly bullish for the last week or so.  Subscribers reported buying August 29 167 puts as I'd instructed. Accordingly, I've established a tracking position of four puts @ 0.82 for your further guidance.  They are to be tied to a 0.57 stop-loss, which would imply a theoretical loss of 0.25 per contract if the stop is hit.  If that should occur, my hunch is that this vehicle will go on to test the old high 300 points above.  The puts traded yesterday as low as 0.70 even though DIA went no higher than 168.12 intraday, but they'll have to 'come home' today or else, since the combination of time decay and just a little more upside will sap their value quickly.  Alternatively, if things do go our way, I've suggested shorting August 165 puts for what we paid for the 167s: 0.82. The execution of either order will cancel the other. ______ UPDATE (9:16 p.m. EDT): Traders exited the put position on a 0.57 stop, taking a $100 hit. We'll back away for now while DIA flirts in headless-chicken fashion with the old record high.

If DIA pushes decisively past the midpoint resistance at 166.51 shown, it would presumably be bound precisely for the pivot's D sibling at 168.02.   I would encourage pivoteers to play the long side for now, using an uptrending abc pattern from the lesser charts to generate a buy signal. If and when 168.02 is closely approached, you should reverse the position and get short using just-out-of-the-money puts with an August 22 expiration and a 167.50 strike. A price of around 0.85-0.90 would be about right, but you may need to adjust that on-the-fly. Make the order good through Friday. ______ UPDATE (8:35 p.m. EDT):  No change. I still like this play. _______ UPDATE (August 18, 9:35 a.m.):  The target is still good, implying you should reverse a long position when it is reached and get short. Use weekly puts expiring August 29 at the 167 strike. _______ UPDATE (11:43 a.m.): Based on chat-room discussion, I've tracking a multiple of four August 29th  167 puts with an 0.82 basis, stop 0.57.  Hold tightly to the stop, since we are intercepting a speeding freight train.