DIA

DIA has been playing pattycakes with my 304.07 target for weeks, headbutting it repeatedly without generating any significant pullbacks. There is no question that buyers are feeling the resistance. A two-day close above it, or a print exceeding 307 (or so) intraday, would imply a bullish breakout, but until such time as it happens, the burden of proof will be on bulls for a rare change. I'd suggested buying February 19 250 puts for 0.80, but Friday's mild weakness left them just out of reach. Keep trying, but only if DIA has not traded above 304.07. If that should occur, I will update this guidance. ______ UPDATE (Dec 21, 6:04 p.m.): I still like the puts for 0.80, but ratchet it down a nickel at time if DIA moves above 304.07. ______ UPDATE (Dec 22, 8:31 p.m.): In the chat room today I recommended scaling in a few puts on rallies, even if the Feb 19 250s have remained just out of reach. The smell of distribution is so thick you could cut it with a knife, and you will have noticed by now that even though DIA has been head-butting my longstanding Hidden Pivot target at 304.07 for weeks, it has not been able to penetrate it. Here's a chart that shows this distribution clearly.

The bull cycle begun six weeks ago from 261.41 came with 0.47 points last week of our 304.07 target, implying that a potentially important top is at hand. We  could find out soon, but if the Dow should turn higher this week after so shallow a correction, it would imply immediate upside to at least 308.23, and thence to 327.27 if any higher.  The pattern yielding those Hidden Pivot resistances is shown here.  I had suggested getting short if 304.07 was touched or closely approached, but there was not enough of a response in the chat room to justify my establishing a tracking position. _______ UPDATE (Dec 15, 5:40 p.m.): Let's try to leg into a bearish, vertical put spread, first by bidding 0.80 for four Feb 19 250 puts, good through Friday. This is well below Monday's closing price, but it is 0.05 above a 0.75 downside  target I've projected using a Hidden Pivot pattern.

DIA has been stalled for two weeks at February's record highs, likely marking time until the mood is right for the next big thrust. Considering the unsettled state of, well...everything, investors' complacency has been extraordinary -- and I don't mean in a good way. Funny money talks, and for better or worse, we are living at a time when there is just no shutting it up. As before, a pullback to p=282.74 would trigger a mechanical buy, stop 275.64, and the D target at 304.07 is still short-able with a tight stop-loss if you've made money on the way up. _______ UPDATE (Dec 8, 5:51 p.m. EST): The target still looks good as a place to attempt a very tightly stopped short, but there has been no opportunity to ride with the trend, since it has been characterized by a series marginally higher highs separated by swoons three to four times as large. _______ UPDATE (Dec 9, 8:43 p.m.): DIA popped to 303.60, 1.10 points from the target. Since no one mentioned this in the chat room, I'll assume for the time being that there is little or no interest in trading this vehicle. Comments? Fills? FYI, this vehicle is still a short as long as it continues to hover within inches of the target. ______ UPDATE (Dec 10, 6:20 p.m.): There were a couple reports from subscribers who took action at Wednesday's top, but tactics varied too much for me to establish a tracking position. Even if I did, Friday looks like it could be a coin toss.

Two potential trades loom for the week: a 'mechanical' buy at p=282.74 that would require a stop-loss at 275.64; and a short initiated at the 304.07 target.  The A-B impulse leg of the pattern is ersatz, since it failed to exceed the record high peak at 295.87 recorded just before stocks collapsed.  But because it's all we've got, we can try to make the most of it. Even fake patterns yield Hidden Pivot targets and levels that are usable even if sometimes imprecise.  My hunch is that the rally target will be achieved because Monday's bullish 'vaccine' gap was so powerful. If the lower is not, however, it would be because bulls are more eager to jump in today than to let stocks fall to relative bargain levels.

Although we were eager to get short last week at a promising Hidden Pivot target at 285.75, DIA never quite got there. The actual top occurred at 284.96, and although that was close enough to allow one to fashion a low-risk 'rABC' trigger, there were no reports in the chat room from anyone having done so.  We can still attempt it if the futures make another run at the target, however. Specifically, I'll recommend buying four Nov 20 270 put options if DIA gets within 0.03 points of the target. They should be trading for around 1.20, but this is just a ballpark estimate that should be disregarded if it seems awry. In any event, I will provide more-timely guidance in real time, since I do not want anyone to pay up for these options. Our odds will never be great betting on direction with naked puts or calls, and every extra penny paid for an option will further reduce our chance of making money. _______ UPDATE (Nov 9, 8:25 a.m. ET): Following last night's record-breaking rally in index futures, the new target lies at 304.07. The red line indicates the hypothetical top of the overnight move, as registered by the futures. _______ UPDATE (Nov 10, 7:30 p.m.): Surprisingly, DIA has rebounded without testing Monday's cavernous gap. There is just too much bravado in this behavior for me to warrant it as bullish. Crazy is probably more accurate, and so we should not expect the show of strength to last. _______ UPDATE (Nov 12, 9:15 p.m.): Moderate weakness has brought DIA down into the gap. Its magnetic pull is strong, and there is no sign of ample buying interest to power DIA out of the hole. Look for more slippage, presumably to p2=282.74. That would trigger a weak 'mechanical' buy,

The short-squeeze from Friday's intraday low missed triggering a 'counterintuitive' buy signal at 265.41 by a hair, but there would have been no compelling reason for us to take the signal ahead of a weekend so fraught with anxiety. If the green line is  hit at the start of the week, it would trip a valid signal, nonetheless -- one indicating minimum upside to p=269.42, or even to as high as D=277.42. We can use the pattern to take the stock market's measure ahead of the election, but any trading opportunities that it might afford us will need to be considered intraday. _______ UPDATE (Nov 2, 9:03 p.m.): One Hidden Pivot target down, one to go: 277.42.  Used it as a minimum upside objective if the rally continues. _______ UPDATE (Nov 4, 10:35 p.m.): A gap-up opening impaled the 277.42 target given earlier in the week, clearing a path to the 285.75 target shown here.  It can be used not only as a minimum upside projection for the near-term, but also as a place to try shorting with a tight stop-loss or an rABC.

The Indoos have been lollygagging for more than two months, biding their time until DaBoyz are fairly certain of how the election will turn out. That could come as early as next week if the stench of corruption swirling around Biden becomes too powerful for the mainstream media to ignore. That could take some doing at the New York Times, whose editorial offices are already an ethical cesspool, and at the Washington Post, which is owned by a man, Jeff Bezos, who obviously despises Trump. Ditto for Mike Bloomberg's vast news organization. In the meantime, DIA, an ETF proxy for the Dow Industrials, has been in a holding pattern. My gut feeling is that it will hit the 297.18 target regardless of who wins the presidential election, but if it's Biden, the Indoos will fall even more sharply than they did in March. The easiest way to leverage this scenario is to buy way-out-of-the-money puts that expire three to four weeks after the election.  Accordingly, I'll recommend bidding a very stingy 0.44 for ten Nov 27 240/250/260 put butterflies. (It's worth around 0.58.) If you are uncertain about how to do this, please review the recorded lesson on butterfly spreads located on your account page. This order is good through Wednesday, but I may adjust it, possibly with the goal of legging into the spread for significantly less. _____ UPDATE (Oct 28, 11:10): The cautious bid I advised was a crucial step behind the big move down, so you can shelve the order for now. _______ UPDATE (Oct 29, 10:33 p.m.): DIA dipped impulsively beneath a key low at 265.27 recorded on 9/24. This would have stopped out more than a few bulls and therefore lightened the burden of profit-taking on the bounce. It wasn't much of a bounce, however,

After triggering a 'mechanical' buy last week on a pullback to the red line (see inset), DIA turned the trade into an instant winner by surging straightaway to the next level, p2=289.41. It didn't quite get there, but unless news over the weekend is exceedingly grim, short-covering will complete the job. In the meantime, the 297.45 'D' rally target that's been in play for more than two weeks can be used as a minimum upside objective for the week ahead. If and when DIA gets there, you can get short using out-of-the-money put options with a tight stop-loss. Stay tuned to the chat room at the appropriate time for more-specific guidance. _______ UPDATE (Oct 19, 9:08 p.m.): It appears some subscribers may have used p=281.36 to get long on DIA's second dip to it. Since this Hidden Pivot caught the intraday low almost exactly, and because the subsequent bounce hit 282.51, you should have taken at least a partial profit. In any event, you're on your own if you still hold a position. ______ UPDATE (Oct 20, 6:07 p.m.): A couple of subscribers reported nailing down profits as DIA rallied a further 3.53 points before pulling back into the close. This seems wise at the moment. ______ UPDATE (Oct 21, 11:45 p.m.): You can use this pattern, which projects minimum downside to 279.88, as a road map for Thursday. For the nimble shooter, bottom-fishing is recommended there via cheap (i.e., under 0.60) soon-to-expire calls, tightly stopped. This is a scalp-trade, so don't be shooting for the moon if it goes your way. ______ UPDATE (Oct 22, 4:41 p.m.): The Dow dove early in the session, but the 280.30 low missed hitting our bid by a significant 0.42 points. I see no comparable opportunities for Friday, but you should stay tuned

The two-day rally that ended the week had deceptive power, exceeding an 'internal' peak and two daunting 'externals' without drawing any deep breaths. It made our minimum upside target at p2=289.41 a shoe-in to be reached and shortened the odds of a further push to D=297.45. We're unlikely to see a pullback to p if DIA hits the secondary pivot at 289.41, but it would make for an enticing 'mechanical' buy if it occurs.  However, it should be noted that exceeding the midpoint pivot took a long running start to achieve, and that's why we'll need to be alert to a possible trend failure above p2. _______ UPDATE (Oct 12, 6:31): Today's top just a millimeter from the 289.41 target was worth shorting with a tight stop-loss, as I noted in the chat room an hour before the bell. I'll establishing a tracking position if I hear from at least two subscribers who jumped on this one. For now, though, with DIA dormant a full point below the target, use a break-even stop-loss. _______ UPDATE (Oct 14, 7:56 p.m.): Feedback on the short was sketchy, so I haven't established a tracking position. You're on your own if you did the trade, but it is sufficiently profitable that you should have taken a partial gain by now. _______ UPDATE (Oct 15, 6:00 p.m.): If the upward momentum of today's reversal continues and DIA closes strong, it would imply that the 297.45 billboarded above will be reached.