Category: Indices

I am recharting the DJIA ($DJI) this week using a slighty different angle for the upward trending line of higher highs.  I’m doing this for two reasons.  One is to show that picking the exact points on a chart can change the story if you are a little bit off and the other is to show that the DJIA is still above the trend line of higher lows I drew last week.  Last week I mentioned some potential factors that could weigh down the markets.  Oil proved to be one this week along with AIG as the other. 

The DJIA is hitting a key point next week.  Both the longer trending downward line from last October and the upward trending line that just starting in March are hitting a triangle and could both provide support.  From last week’s chart I also mentioned that the Dow finally broke above the 13,000 mark.  I should have waited for another day closing above that mark before considering it a true break above.  Having 2-3 days close above the potential ceiling are really needed for confirmation.

Take all this with a grain of salt this week (as if you should ever treat it with any more validity).  I hurt my neck again on Friday …

I’m back to charting the Dow Jones (aka “DJIA” or symbol “$DJI”) today.  It finally broke above 13,000 and even stayed above it on Friday.  That put the DJIA above the line of resistance at 13k and since I last charted the DJIA, it broke the lower resistance around 12,700.  You can see a new upward channel that has formed starting with the low of January as the beginning of the trend line of higher highs.  It has also stayed above the 10, 20 and 50 day moving averages for a couple of weeks.

Due to this break above 12,700, I’m changing my sentiment to slightly bullish on my home page.  I went Bearish in January when the DJIA was at 12,500 and should have changed it two weeks ago.  At least I’m awake at the wheel again now.

I opted for slightly bullish versus just flat out a raging bull because I see potential for some factors that could weigh us down still.  If the DJIA can get down to that lower trend line of higher lows, I’ll be ready to jump in more than I have already.  As of this weekend I’ve sold enough naked puts combined with my long positions covered with calls to equal 102% of my account value.  I have a lot of options expiring in May, so I’m in a position to …

I had another strong month in April.  I’m still unwinding some of the trouble I got in back in January (and earlier).  Although I’m taking some realized losses for those mistakes occasionally, I’m moving forward which is the entire point.  I stopped letting emotions play a roll in my investing again and accepted some losses on NYX and ADBE to end the month with a higher total account balance. 

I’m still not convinced we won’t have another pull back before we take off again, but hope the Fed has finished with rate cuts for a while.  That can only be the case if they see an improvement in the economy, which apparently they haven’t seen enough of yet.

My account summary for April 2008: 

My current account value according to Ameritrade is $85,140.39 and according to Quicken is $85,388.20.  Here’s how the returns break down:

12 month return: -2.18%
Since my blog’s beginning (4/8/07): -0.01%
I deposited $2,000 on 4/2/08

According to Morningstar, here’s how I compare to the major indices:

12 month S&P 500 Return: -5.06%
12 month DJIA Return: +0.11%
12 month NASDAQ Return: -5.13%
12 month Russell 2000 Return: -12.25%
12 month S&P Midcap 400 Return: -4.05%

I continue to enjoy comparing my results to the major indices.  It helps me keep my eye on the end goal of total portfolio gains.  Every month I’m reminded that each individual stock or …

I didn’t realize how long it had been since I last charted the QQQQ until a reader asked me to chart it again.  I’m glad I did, because this is an interesting chart.  Originally I thought this week would show just another trend line acting as a ceiling soon, but then I revised my moving average to include the 100 and 200 day sma (simple moving average) and saw the QQQQ was caught in between the two longer term moving averages.

The trend lines are worth some attention though. I like seeing three lines in an ascent rather than in a decline.  Both the lows and the highs are continuing to reach new near term highs and even when I take out some of the extreme points and draw a trend line more through the middle I see a positive outlook.  The middle line could act as support and keep the QQQQ above 46.  If that breaks (and I think it will), the next line of support is just barely above 44 and could reach 45 by the time the QQQQ comes back down again.

I drew the horizontal line at 50 where the first three days of trading this year kissed against, as a floor twice and then as a ceiling before taking a dive.  Whenever we get back up there I don’t see us shooting through it before …

I’m charting the Russell 2000 for the first time on My Trader’s Journal to add some more variety to my charts. I haven’t traded much the past 1-2 weeks for precisely the reason that shows in this chart.  I saw us coming to another turning point and didn’t want to leg in too deep before I saw some of the indices cross the ceilings that have been the top of this trading range since January.  They didn’t past the test and I held back.

We kissed that ceiling again last week and faltered.  Throw in the declining VIX and I see no reason to go in heavy long right now.  I’m actually thinking of taking a suggestion from a frequent commenter, Kadena, and buying options to day trade. (I’ll post some of his results later this week).  If I’m reading this chart correctly, 650 seems a possible near term price for the Russell 2000. 

It just hit the same ceiling that’s been plaguing it and that coincided with the longer term downward trend of lower highs.  It fell below the 10 day, 20 day and 50 day moving averages this past week too.  Each of those five technical indicators is bad on its own, together I’m getting more bearish.  And then I turn to Williams %R and see that $RUT just broke below the overbought range for …

I’m charting the S&P 500 SPDR (SPY) this weekend.  Like the rest of the large “spiders” it’s still in a trading range that started in January.  For the past four days it touched top side of the relatively short upward trend line that started at the beginning of March a month ago, but couldn’t break through.  I like seeing this uptrend brewing, but until it gets above the trading range that tops out around 140, I won’t feel too inclined to be a big buyer.  The next dip will be interesting to watch to see if it goes all the way down to 130 or just to the latest uptrend which could be at 135 by then.

The number options I’m short are heavily weighted towards the April expiration aside from the two sets of May naked puts I sold in the second half of this week.  I still have a bearish sentiment on my home page and have been considering a change and just can’t bring myself to change it until we break through that ceiling.  Of course I won’t be calling the bottom.  I’ll be saying our upside potential is finally outweighing the short-term downside potential.  With earnings season beginning, I’m cautious.  It doesn’t take an experienced investor to predict it will be a rocky …

The Down Jones ($DJI) remains range bound still as we finish off the end of the first quarter on Monday.  It appears to be destined to stay within a few hundred points of 12,000 and 12,500.  A longer-term down trending line helped to keep it within this range as the DJIA tried to angle up on Monday.

The DJIA has been above its 10 day moving average for more than a week until Friday when that finally broke.  Luckily the 20 day was just below that point to offer support.  If the 20 day continues to provide support, the 10 day will be able to have a fighting chance to come back into play.  The longer the DJIA stays below the 10 day, the worse it is in the near term.

I’m not making any huge bets until I us below 12,000 again and back on an upswing.  Caution should be your friend until we actually find some solid legs again.  I’d also like to see the VIX above 30 again before diving in too deep too soon.  Once traders get completely used to this trading range and consider it a guarantee is when it will break.

How many of you realized that the DJIA finished up for the week ending March 14, 2008?  It’s amazing how quickly the glory day of a 400+ point gain can be washed away in our minds.  The S&P 500 dropped 5 points, the NAZ was flat and the Russell 2000 was down 3.  Not too bad considering how the last three days rolled down hill.

The biggest take-away from the chart below is that we are still in the trading range that includes the bottom from mid-January.  The DJIA is also hitting the lower trend line of lower lows.  It’s interesting to see these two lines coming together.  One will win out, support around 11,650 or the trend of lower lows.  Neither would surprise me, but I have to lean to the support will hold side based on the end of the day rally on Friday.  I think a lot of investors are spooked out of the markets at this level and we’ll continue to have big rally days when we hit the lower areas of the chart.

That said, watch out for the declining trend line of lower highs which is currently almost touching the ceiling level from recent weeks around 12,500.  Selling rallies can continue to be a fairly smart/safe move.

On a non-financial note of interest, I took some pictures yesterday of the tornado damage to downtown …