DIA

We hold two September 126 puts whose cost basis has been reduced by partial profit-taking to 0.45.  We'll stick with this position come hell or high water for two reasons: 1) September 21 is a long way off,  and 2) our exposure is by now minimal. We are effectively betting that the ferocity of this short squeeze will be sufficient to scare the pants off everyone but us. 

Although the recent top in the Dow Industrials fell a whisker shy of my 13003 target, the Diamonds hit a corresponding target I'd given at 129.51, eventually registering an intraday high of 129.71.  Since I had advised buying four September 126 puts if DIA got within 0.15 points of 129.51, I am establishing a tracking position --  four puts @ 2.12 (their low that day was 2.04). For now, offer two of them (or half of the original position) to close for 2.80.  My immediate downside target for the QQQs is 127.36, based on the pattern shown. It is that target on which I have based the profit-taking strategy above. _______ UPDATE (10:07 a.m. EDT): With this morning's powerful gap-down opening, we did far better than we'd planned, exiting two puts (or half of the original position) for 3.75, the price they fetched on the opening rotation.  Imputing the paper profits thereof to the remainder of our position gives us an effective costs basis of 0.45 apiece. Do nothing further for now.  The purpose of relatively easy trades like this one is to pay for the cost of your subscription, and we are well on our way to that goal with this trade. ______UPDATE (July 24, 12:45 p.m. EDT): The daily chart is still bullish, believe it or not, but this would be negated with a print at 124.24 that would take out two prior lows.  The bigger picture, starting with the 133.14 high recorded on May 1, projects to at least 123.23, the 'p' midpoint of the pattern. It's tied to a D target at 116.67, which is my worst-case projection for the next 4-6 weeks.  We'll look to spread off our puts by shorting some juicy out-of-the-moneys against them if and when p is approached, but for now

I'm adding this ETF to our list of vehicles to be shorted every blessed chance we get.  Although I cannot predict how things will play out Monday morning, two places to look for camouflage cover  are noted on the chart, respectively, at p and D.  The same offer I've made in conjunction with the QQQs applies: a free year’s subscription, including access to weekly tutorial sessions, to the first Pivoteer who signals a trade that survives for at least 24 hours. You will also receive a second annual subscription to be awarded to the recipient of your choice; and a one-hour private tutorial session worth $350.  To claim your prize, the trade must be initiated using a Hidden Pivot signal, and the signal must be disseminated in the chat room in timely fashion so that at least two others have been able to get aboard.  _______ UPDATE (June 19, 1:33 a.m. EDT): The weekly chart has tripped a sell signal at 125.47 (A=133.14, B=120.19), giving camouflageurs a green light to attempt getting short. Beware, however, of a possible bounce from 122.23, the pattern's midpoint support.  _______ UPDATE (June 28, 10:53 p.m.):  A still-bearish big picture remains viable, but shorter-term indicators suggest the Dow is likely to move higher before it falls hard.  Under the circumstances, this vehicle should be shorted cautiously only at 'd' rally targets or, via camouflage, 'p' midpoints.  _______ UPDATE (June 29, 8:59 p.m.): Much as I'd love to short this flying sow right now, the lesser charts that we might use to do so are filled with menace. Perhaps Monday will bring better opportunities, assuming the Diamonds have traded outside of Thursday's nervous range.

A 129.75 rally target given here previously remains valid (as does another, close by, at 130.15), but getting short there could prove tricky, since we'd be attempting it following the creation of a fresh, bullish impulse leg on the hourly chart. Obviously camouflage is called for, and it will be best found on charts of three-minute degree or less.   I've set a screen alert and will signal the opportunity in real time if things play out to our liking. 

We're looking more and more aggressively for low-risk opportunities to get short, since it's possible that stocks have entered a bear market.  This equity-based (as opposed to futures-based) vehicle is optionable and highly liquid, so that, for the benefit of novices and experts alike, I'm going to start stalking it as we are already doing with the QQQs. For the moment, however, we won't attempt to impede it, since yesterday's spike just before the bell exceeded the 'D' target of the minor pattern shown. If still higher prices impend as we might therefore expect, the shortable 129.75 'D' target of the larger pattern begun on June 5 is a logical minimum price objective.  Its midpoint sibling at 126.80 is close enough to yesterday's high to yield an enticingly shortable top, but it is not my practice to establish short positions ten second before the final bell.  If the high had been achieved with 30-60 minutes remaining in the session, tough, I'd have said, "Short away, camouflageurs!" 

DIA is closing on a 130.88 target that closely corresponds to the one we are using for the cash Dow. Let's  plan on shorting there by legging into a put spread, buy-side first. This should not be treated as a bet-the-farm play, but rather as an opportunity to make back the cost of your subscription -- and perhaps the cost of the Hidden Pivot Course. Accordingly, we'll use a stop-loss for the puts, albeit a generous one. Keep in mind that if this vehicle overshoots 130.88 by more than a couple of points, it would be telegraphing further upside to the 133.36 'D' target of a much larger pattern begun in August 2010 from 99.11. Regarding our trade, I'll recommend buying four April 128 puts with the underlying trading within 0.15 points of the target. I estimate the puts will be trading for around 2.07 then, but you should follow the bid/asked when the target is approached to get the best possible price. Since we aren't betting the ranch, mainly because the point 'B' here is a bit sausage-y, stop yourself out of the position if the puts trade for 25 cents less than you paid for them.  The theroretical risk on this trade would therefore be around $100. ________ UPDATE (March 2, 12:45 a.m. EST):  The 130.21 target of a lesser pattern raises the odds that the tradable top we were looking for has already occurred. Accordingly, I'll be looking for entry an opportunity to initiate the short intraday.  We may not be able to get the best price that would have been available, but my goal in any event will be to choose a safe entry point that will put us quickly in-the-black.  Any trade that is executed will be signaled via an e-mail alert, an update to

My gut is telling me that the broad averages are ready to fall, although any such move should be viewed as merely corrective for reasons explained in yesterday's DIA tout.

Yesterday's 118.43 high came within 0.05 points of surpassing a key peak recorded in August just ahead of a selling avalanche. There is no disparaging the importance of this peak, the penetration of which would re-energize the bullish impulse on the weekly chart. Unfortunately, bizarre strike-price adjustments have made this vehicle all but untradable, at least by retail customers.  My strategy would be to butterfly the 127 strike, since that's where DIA appears to be headed. As an alternative, we may be able to use SPY options as detailed elsewhere in today's touts.

In the chat room earlier this week, I recommended buying Feb 115 puts if and when DIA hit a rally target at 117.61. They spiked to 117.65 on Wednesday, so I will establish a tracking position of four puts @1.20 for your further guidance. (The low on the puts was 1.18). There were corresponding short recommendations in the E-Mini S&P, which fell three ticks shy of an 1185.25 target; and in the Mini-Dow (YM), which failed by 29 points to reach its 11759 target.  Concerning our put position, I'm going to suggest closing out two of them using a 1.42 offer, good-till-canceled.  Make it one-cancels-the-other with an order to close out all four puts at-the-market if they should touch 1.20 again. ________ UPDATE: We scratched the puts for no net gain or loss when the Diamonds began the day with renewed strength. The puts blipped very sleazily up to 1.36 on the opening, as put options in a bull market are wont to do, but that wasn't quite good enough to take us out at a profit. We'll continue to short every potential rally top simply because we can -- more or less painlessly.