Improve Investment returns with opinion of Market Direction

This post is somewhat of a continuation of an earlier post on patience. 

Every weekend I chart one of the major indices (QQQQ, DJIA, S&P 500) and post about it to give myself an idea of where I think the overall markets might be headed.  A few weeks ago I started keeping my opinion of the near-term market direction at the top of the home page.  I think this is crucial as part of a trading model that works over longer periods.  While just the movement of any of these indices does not mean every stock will trade in the same direction, it can keep you out of “trouble” sometimes by being caught overextended when the majority of stocks take a dive or even just a dip.

I’ve been holding back a little recently although I have a neutral rating for My Trader’s Journal’s Market Sentiment indicator I mentioned on the home page.  Maybe I should have left the “bearish lean” in there since my actions seem to show that’s more of my true belief.  Maybe it’s just wishful thinking that the markets aren’t heading lower, but I’ve still been hesitant for many big trades in the past couple of weeks.  Yesterday’s price action validated that opinion.  I think we are getting closer to better entry points and this weekend’s chart will help tell us.  Until I turn bullish again, I’ll keep selling naked puts farther out of the money.  With the VIX and VXN up to 23.21 and 26.26 respectfully we should continue to be able to take in good premiums at a reduced risk farther out of the money.    If you are not reading this article on www.mytradersjournal.com you are reading it from a site that has plagiarized it.

I’m half writing this post to remind myself to stick to my rules as I am eager to load up on new options with my impending job change.  I know I’ll have very little time to dedicate to investing (and blogging) until I can get established in my new role and I don’t want to mess up my streak by sitting on the sidelines. Without actually having or accepting an offer yet, I may be putting the cart before the horse anyway as it could end up that I have too much time on my hands after my contract here at AT&T ends.  It’s more important to remember that making some stupid investment moves when the indices don’t agree could cost more than just missed gains.