Dow Industrials ETF

The pattern shown, with a 383.00 target that lies 11% above, is just gnarly enough to work. It is similar to one featured in the Hidden Pivot Method Course, and it has the particular advantage of being invisible to most other chartists and traders. Price action at p is not exactly reassuring on whether D will be reached, but p2=361.90 looks like a good bet as a minimum upside projection for the next 4-6 weeks. A swoon to the green line (319.69) would most surely raise the kind of fears that 'mechanical' bids thrive on, but for now we'll concentrate on trades of smaller degree in order to trade with the trend. That would imply rabc patterns on the hourly chart, going back no more than two weeks. _______ UPDATE (Jun 3, 10:06 p.m.): Bid 0.20 for four Jun 30 320/325/330 put butterfly spreads, day order.  The order may be tough to fill at that price, so stay tuned for a possible intraday adjustment.

The short I'd recommended from 341.09 (see inset) ended the week underwater, but that hasn't diminished the textbook appeal of the pattern itself. Traders seemed as eager as we were to profit from the short side, but they seem to have spent half of Wednesday and all of Thursday and Friday trying to gnaw their feet free from a tightening trap.  Anyone who stuck with the short position will have the possible opportunity on Sunday night to experience that rare feeling of exhilaration bears get when the markets are clobbered by a weekend surprise.  For now, however, the original downside target at 329.55 remains theoretically viable. Be sure to cover half at p=337.24 if possible. _______ UPDATE (May 25, 12:22 a.m. ET): The short missed getting stopped out by a hair. Assuming it happens today, beware of a high marginally above C=344.93 that gives way to renewed weakness. _______ UPDATE (May 25, 11::10 p.m.): The head-fake happened as predicted, but the feeble decline that has followed so far suggests bulls will soon be bounding higher. ______ UPDATE (May 26, 5:29 p.m.): Or perhaps not. DIA appears to be rolling over.  In any event, bears will soon have holiday seasonality to contend with.  _______ UPDATE (May 27, 6:15 p.m.): As expected, it's a-wafting we will go, with bears in hibernation ahead of the holiday weekend.

 I still like the 354.89 Hidden Pivot target that has served as our lodestone since early April.  The pattern to which it is tied is somewhat gnarly, although not quite gnarly enough for us to assume we would be alone shorting at 'D'. The target is particularly enticing nonetheless because with DIA at that height, bears would be caught in a murderous short squeeze while bulls would be giddy. A perfect storm, perhaps? Regardless, we should look to get short at a top that occurs just below D, and to extract what we can in the meantime from the implied rally to it. We should also be alert to a possible trend failure somewhat shy of last week's record 351.09, since virtually everyone will be expecting it to be breached or at least tested. _______ UPDATE (May 18, 11:13 p.m. ET): The close beneath the green line implies DIA is bound for at least p=337.24. With a little more weakness, this could be the first time in a long while that we've had a pattern suitable for getting short 'mechanically'. Here's the chart. ________ UPDATE (May 19, 10:56 a.m.): Having crushed the 337.24 midpoint Hidden Pivot that was our minimum downside target, DIA is now a shoe-in to hit 329.55, the 'D' target of this pattern. A rally to the green line -- x=341.09 -- would trigger a very appealing 'mechanical' short, stop 344.94.

Back-to-back rallies on Thursday and Friday eviscerated the 345.22 rally target we've been using since late March, but it will face two more obstacles over the near term that are nearly as daunting. The first lies at 347.77 and comes from lowering the point 'A' of the original pattern. The second, also a Hidden Pivot resistance, is at 349.89, derived from a much larger pattern begun in October from 261. The latter target can be shorted using out-of-the money puts priced under 0.60 if and when DIA gets to 349.72.  This will be akin to catching a speeding bullet, so a tight stop-loss and relatively small bet are advised. ______ UPDATE (May 10, 5:32 p.m.): DaBoyz artfully laid off pounding the Dow to avoid the appearance of a stock market getting schmeissed. The Smart Guys will get creamed on Tuesday if they attempt this dog-and-pony show with the broad averages  falling as hard as they did on Monday. Since the bull-trap high early in the session obliterated my 349.89 rally target before things went south, I've substituted another pattern furnished by an eagle-eyed Pivoteer, 'Ovcactus', in the Trading Room. Its 354.89 target leaves us room to consider 'mechanically' bottom-fishing at p2=348.32 (no!); at p=337.36 (maybe); or at x=329.19 (for sure, although we'd only be shooting for a ride back to p).  ______ UPDATE (May 13, 12:34 a.m.): The 'mechanical' long from x=329.19 is still a go, but be aware that this will require a 'full monty' stop-loss just below C=320.62.  Monday's high at 351.09 could be an important one, and that's why I am not suggesting that a long position acquired at X be held for anything more than a ride up to 337.76. I rate the trade '6.8', implying a 68% chance of getting from x to p -- not

The Diamonds spent the week lollygagging, making no progress toward a 345.33 target aired here earlier. It remains valid nonetheless, and is an odds-on bet to be reached because of the way the C-D leg of the rally gapped through the 332.98 midpoint Hidden Pivot. A corresponding target sits at 34,549 for the Dow Industrials, but we'll focus on this ETF vehicle in order to get short with little risk.  We can do this in two ways: an odd-lot sale triggered via a small-degree 'rABC' pattern; or the purchase of put options if and when 345.33 is very closely approached (i.e., within less than 0.50 points). For now, trade with a bullish bias, since 345.33 is our minimum upside objective for the near term.  ______ UPDATE (Apr 30): Yet another week of tedious sideways scuddling left the analysis and outlook above unchanged. ______ UPDATE (May 4, 5:18 p.m. ET): With the Nasdaq and small caps getting socked, DaBoyz eked out a slight gain on the day in the Dow. This would seem to suggest that their oh-so-clever clever one-trick-pony -- i.e., rotating money into the flavor-of-the-day/week/month -- is working. However, they will not be out of the woods and will remain in jeopardy until such time as all of the broad averages are moving higher synchronously. Under the circumstances, we should be alert to the possibility of a bull trap rally narrowed to the Dow alone..

I've stretched the pattern to produce a 413.45 target that maxes out the monthly chart and which is roughly congruent with a long-term target at 4905 in the E-Mini S&P.  The pattern uses a 'marquee' low for point 'A', which is not ideal. In this case, however, it seemed logical in preference to either of the indistinct, one- and two-off lows recorded in 2010 and 2011.  Bulls have pushed past the 297.98 midpoint resistance with authority, shortening the odds that D=413.45 will be reached. For now, though, the secondary pivot (p2) at 355.61 can be used as a minimum upside objective. I will be closely monitoring price action there to gauge how much buying power remains. There may be an opportunity to get short at p2, so stay tuned to the chat room or your email 'Notifications' if you care. _____ UPDATE (Apr 20, 6:36 p.m. ET): Weakness stretched into a second day. This is somewhat unusual these days, but a third 'down' day would be almost freakish. Wait and watch! _______ UPDATE (Apr 21, 8:16 a.m.): DIA has receded slightly from Monday's all-time high. If this is a Titanic disaster in the making, the ship has just left Liverpool. ______ UPDATE (Apr 21, 5:06 p.m.): Three straight down days? The odds are better that the sun will fail to rise in the East tomorrow. The lesson is that you'll have a hard time losing money if you take home a long position at the end of a second straight down day on Wall Street. ______ UPDATE (Apr 22, 10:09): It's refreshing to imagine that today's moderate selloff was the start of a catastrophe, but I doubt it. The 345.33 rally target in this chart looks all but certain to be hit, given the gap through p=332.98 on the first

The 345.58 target we've been using came into even sharper focus with last week's rally, athough we should be alert to a possible stall at p2=339.34, the secondary pivot. I've suggested shorting both with very tight stops, provided you've been making hay on the way up. This pattern is clearer and more compelling than the one I've flagged for the DJIA, and it is the one you should favor if you trade this vehicle.  Most immediately, that would imply placing a 'mechanical' bid at the red line (333.10), stop 328.94. You should do so only if DIA first trades a bit higher, topping in the range 339.00-340.21. ______ UPDATE (Apr 15, 9:13 p.m. ET): Buyers bulldozed p2=339.34, implying that more upside to at least 345.58 is all but certain.

Last week's subdued price action failed to push DIA past the 332.99 midpoint Hidden Pivot of the pattern shown, so the 345.58 [corrected] rally target given here earlier is still not fully in play.  It would be, however, following a two-day close above p or a sharp move through it intraday. A theoretical buy signal has nonetheless been in effect for ten days after triggering with a rally to the green line. However, it may be asking too for DIA to revisit the line to give us a second chance to get long 'mechanically'. _______ UPDATE (Apr 5, 6:36 p.m. EDT): The lunatic leap through p=333.10 on the opening bar implies that more upside to at least D=345.58 over the near term is all but certain.  [Note: Both of these Hidden Pivot resistances have been corrected slightly.] You can short 345.58 aggressively with a tight stop if you've made money on the way up.

DIA seems likely to hit new all-time highs this week, considering the ferocious short-squeeze goosing it received in the final hour on Friday. My minimum upside projection would be 335.04, a Hidden Pivot that could conceivably provide scalpers with an opportunity to get short, however briefly. Once above that Hidden Pivot, however, the 345.36 target of an even larger bullish pattern would be in play.  You can use this chart to establish levels for 'mechanical' bids on the way higher. _______ UPDATE (Mar 31, 9:16 p.m. EDT): Archegos and the stuck tanker cooled the rally, but the Dow is still up for the week. Bulls probably won't risk closing stocks significantly higher ahead of the three-day weekend, but if the world survives till Monday, expect them to hit the ground running.