DIA

The 250.35 rally target we used last week is still in play, but I can offer no guidance in advance of Monday morning's opening that is guaranteed to survive further weakness overnight.  I've proffered a 'mechanical' buy at the green line for the E-Mini S&Ps, but this vehicle would trigger a comparable signal at the red line, p=228.77, stop 221.57. Check in after the bell, since the opportunity may be developing in a way we can exploit using call options. ______ UPDATE (Apr 13, 10:12 p.m. EDT): Once again, DIA is poised to trigger a red-line buy at p=228.27, and once again I cannot recommend it until I've seen how stocks open Tuesday morning. _______ UPDATE (Apr 14, 6:40 p.m. EDT): DIA opened on a gap higher, negating the easy 'mechanical' entry we'd sought at the red line. This helium balloon is still going to 250.35, but any shot we have of climbing aboard before it gets there will have to come from an intraday set-up. Plan on shorting at 250.35 in any case, using puts priced under $1 that have a week or so left on them. The trade should not be initiated until such time as DIA trades within 0.07 points of the target. ______ UPDATE (Apr 23, 9:15 p.m.): This space for rent! _______ UPDATE (Apr 27, 9:05 p.m.): Using a 24-hour chart, I've changed the point 'B' high slightly to come up with a new target at 250.43. My trading strategy can stand as given above. _______ UPDATE (Apr 28, 9:22 p.m.): A plunge to 228.36 would trigger a 'mechanical' buy signal, stop 221.00. Please note that the 250.43 rally target is still viable.

My forecast zigged and DIA zagged. Oh well. Now DIA is about to probe the 228.77 midpoint resistance shown in the chart. An easy move through it should be taken as a sign that more upside to at least p2=239.56 remains. The outlandish D target at 250.35 would somewhat exceed a corresponding target at 2881 that I've proffered for the E-Mini S&Ps, but we'll trade each as though the other did not exist. If both vehicles were to reach their respective D targets, it would be as though there had been no bear market at all, just a garden-variety 15% correction. Considering what caused the stock market to collapse in the first place, and the fact that a deep recession is coming under the best of circumstances, the rally would be the most powerful -- and ridiculous -- short-squeeze in history. That, of course, is the purpose of short-squeezes -- in this case to persuade investors that they should never have doubted the advice of the shills and idiots who have been telling them to sit tight. It is predictable that the next leg down will be even more history-making than this psychotic rally. _______ UPDATE (Apr 7, 9:25 p.m.): If DIA falls to the green line (217.97), it would trigger a 'mechanical' buy signal. Stay tuned to the chat room if you're keen on trading this one. ______ UPDATE (Apr 8, 9:18 p.m.): DIA came nowhere near our niggardly 217.97 bid when it dipped slightly in the first hour. A minimum 250.35 is still where it's headed, but we'll have to keep looking for opportunities to get aboard. The next potential stumbling block is 239.56, the secondary Hidden Pivot.

DIA spent most of last week avoiding what I still regard as a very likely fall to at least 200.92. This midpoint Hidden Pivot support is nicely located to set up a enticing 'mechanical' buy, although I've already warned that call options may prove too pricey to yield the kind of edge we need to do the trade. Still, with DIA priced above $200 per share, we'll need to find a way so that subscribers with relatively small trading accounts can participate. In practice, this will probably mean buying the nearest strike with soon-to-expire options offered for under $1.00, and bidding the options only  when DIA has gotten with a dime of the target.

Because DIA opened on a gap below the green line (see inset), it is very likely to continue falling to at least 200.92, the midpoint Hidden Pivot support shown in the chart. Ordinarily I would suggest bottom-fishing there using call options, and would encourage Rick's Picks newbies to join in the fun, especially if, like most who have tried their hand at options, you've never cashed a winning ticket. Options premiums are so ridiculously juicy, however, and bid/asked spreads so wide, that we may have to sit this one out.  Stay tuned to the chat room in any case, since opportunity may come unexpectedly. ______ UPDATE (Apr 2, 11:15 p.m. EDT): The subdued short-squeeze in the final hour did not change my outlook, although you should not do the trade if 200.92 is hit in the final hour. It would take a rally exceeding 225.87 to negate the bearish target.

DIA has been struggling too hard to get past a midpoint resistance at 221.11 to suggest it's on its way to the 236.90 'D' target of the pattern shown. Although there's a good chance last Thursday's high at 225.87 will prove to be an important top, I'll hold off on shorting strategies until this vehicle  catches up with index futures Monday morning. While I've put out a paper-trade in ES that called for buying this evening's opening at 2459.00, this advice does not apply to the Diamonds because they trade only during U.S. daytime hours and have traced out a less bullish pattern. Of course, the two vehicles cannot go their separate ways, but it's possible the E-Mini S&Ps can fulfill their rally target outside of regular hours. ______ UPDATE (Mar 30, 10:10 p.m. EDT): The Indoos have spent four days screwing the pooch near p=221.11, but today's close above this pivot implies minimum upside over the near term to at least p2=229.01. _______ UPDATE (Mar 31, 7:22 p.m.):  Zzzzzzzzz. No change even though DIA closed below the midpoint Hidden Pivot today.

By popular request, I am going to start tracking this ETF vehicle more closely in order to give subscribers an alternative to futures contracts for purposes of trading and portfolio positioning. We got off to a good start today when a 221.11 rally target that I posted in the Trading Room came within less than a point of nailing the top of the session's rabid, short-squeeze rally. Numerous subscribers reported buying put options, or interpolating short triggers in other vehicles to produce a quick, lucrative score that in some cases exceeded $1,000. Now, a fall beneath C=205.32 would negate the bullish pattern though not necessarily end the manic buying binge of the last two days. Alternatively, a close decisively above p=221.11 would put the 236.90 target in play. ______ UPDATE (March 26, 8:16 p.m. EDT): The vicious spike in the final minutes means bears are still badly on the hook. Use p2=229.01 as a minimum upside objective (see inset), and thence D=236.90 if it's decisively exceeded.

I like the 301.60 target shown in the chart enough to suggest a play linked to it. Buyers took a couple of days to get loft above the 291.61 midpoint pivot, but it looks now like it is about to become support for a shot at D. If we assume that it will take perhaps two weeks to get there, we can use the target to set up an option trade that will risk very little if we are wrong but produce a substantial gain if we are right (aka 'leverage'). Accordingly, I'll recommend  buying the March 6 299/302/305 butterfly spread four times for 0.32 or better, contingent on DIA trading 292 or higher, good through Friday. If you can leg into the position for less using, for one, an rABC pattern to do the long side first (i.e., buy four 299s; the 305s can be acquired later, since they won't move that much), then by all means do so. If you don't know much about butterfly spreads, you should pass up the trade and wait for an opportunity you fully understand. A simpler strategy would be to leg into a vertical call spread, such as the 300/302.50 for 0.30 or less. Stay tuned to the Trading Room for further guidance on this, since it will require real-time strategizing. You can help out by letting me know of your interest. _______ UPDATE (Feb 18, 8;22 p.m. EST): In the Trading Room this morning 'Hammer' reported doing the butterfly for 0.32, so I'm establishing a tracking position of four spreads. The worst loss possible is $128 for a shot at a gain of up to $1,000 -- pretty good odds if you think the bull market will continue to shrug off the coronavirus threat. _______ UPDATE (Feb 23, 9:45 p.m.): Far

Friday's punitive reversal occurred from a high recorded several days earlier that missed a crystal-clear target I'd flagged at 295.62 by a mile. Although the target remains valid in theory, it seems more likely that the selloff will gain momentum this week, generating an impulse leg on the daily chart. That would require a print below 287.84, a threshold that will probably be achieved on Monday's opening if index futures have opened weak Sunday night.  The bearish impulse leg would be no more powerful than the one in early December that gave rise to a powerful rally, but this time it would be occurring in a more critical place --- i.e.,  visibly short of an important target that had the potential to cap the bull cycle begun in October. Regardless, bulls should brace for a fall to at least p=284.62 before they venture forth again.  That would trigger a long-shot 'mechanical' buy in theory, but we would take the trade only with risk very tightly controlled, if at all. ______ UPDATE (Jan 27, 10:07 p.m. EST): Sellers overshot p=284.62 (see above) by  0.76 points, implying they are not spent. The impulse leg would grow in power if further weakness on Tuesday exceeds 283.56. _______ UPDATE (Jan 28, 9:08 p.m.): DIA leapt higher at the bell and never looked back. In retrospect, p=284.62 now looks like a 'mechanical' buying opportunity foregone. Bulls have a tough climb ahead nonetheless if they are going to reach the 295.62 target that was missed by a foot on January 17, when the Dow notched a record high. _______ UPDATE (Feb 1, 10:57 p.m.): A tough climb indeed!  DIA reversed sharply from well shy of the 295.62 target identified above and now appears headed down to at least 280.08. Bottom-fish there with a small-pattern rABC pattern,

I've redrawn the chart to produce a 295.62 target that looks promising for a shortable top. Your trading bias should be bullish until it is reached, but you can short there aggressively if you've made money on the way up. I'd suggest using puts priced under 0.70 with 7-12 days left on them. We do not need to go further out in time because our strategy is predicated on catching a bearish reversal precisely when it begins. The new target replaces one at 291.78 that has looked less enticing as DIA's ascent has progressed, It uses a point 'A' low that was made in off-hours trading, as occurred several times during the rally begun in mid-October.  The target roughly corresponds to a revised 'D' that I have proffered for the E-Mini S&Ps. Like that tout, this one will not be publicly viewable.