Category: Indices

I hope everyone had a nice long weekend.  I did.  I’m slow getting back to investing as I busy at work on such a short week.  This is my big play of the week, maybe.  I bought a couple of calls on Friday and wrote about it here.  The key for what I need to happen is for the chart to hold up and let the trend line of the higher lows and the 10 day moving average continue to provide support.  If those lines work, SPY will be up this week.  If not, I’m out $200.

I’m using this move because I am bullish on the SPY chart below, but worry that oil will rain down some pain on stocks’ earnings soon and we’ll see another decent pull back.  I don’t want to sell  many new naked puts until I see a bigger pull back and oil drops in price.  On the other hand, I don’t want to miss an opportunity.  This play gives me small exposure while limiting my downside.

I read a bullish article in Barron’s this past weekend on Kraft (KFT) and put a limit in to sell naked puts if it dipped.  The chart showed it had room to come down and any time I see a bullish article in Barron’s or another rag I try to wait a few days for any short term bounce it has to wear off. 

I priced my limit to hit somewhere close to its 10 day moving average.  This morning KFT crashed through its 10 day moving average and hit the 20 day moving average where it found support, below my strike.  While KFT was trading at 32.18 I sold three KFT July 32.50 naked puts (KFTSZ) and received $362.75 after commissions.

My second trade in the same account today was a different one than I usually make.  I’m putting my money where my mouth is on this one based on my chart of the S&P 500 last week.  I used a major S&P 500 ETF, SPY, to play the chart.  When I charted the S&P last weekend I said it looked due for a pull back.  It spiked briefly on Monday and hit the upper trend line intraday and then continued south all week to hit the lower trend line of higher lows this morning.  I took the opportunity while SPY was …

I mentioned in last week’s Dow Jones Chart that I thought support was showing and the DJIA could tick higher.  It did.  I came back this week to chart the S&P 500 ($SPX.X).  This is a six month chart of the S&P 500 as opposed to the slightly longer chart last week and therefore has slightly different lines to draw our focus.

The primary negative (bearish) technical indicator I see is the 200 day simple moving average (sma) acted as a ceiling last week on Thursday and Friday. The 200 day line can be a hard line to cross and this time proved no different so far.  Then again on the positive (bullish) side the S&P has stayed above the 1400 mark for a few days.  We’ve been jockeying back and forth across 1400 for a few weeks. With the upward trend lines of higher lows reaching 1400 at the same time as the 10 and 20 day moving averages moving up to provide further support, the path of least resistance could be up. 

Earnings season provided more fuel for the bulls’ argument, but I have to continue to ask when will such high oil prices dampen the run.  I think we’re due for a pull back, even if the only reasons are oil and the 200 day moving average.  I admit the trading channel …

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 …