Category: Stock Charts

I’ve only made one trade for August options expiration and that was a covered call.  I just can’t find the stocks I want to sell naked puts on.  I have one limit order in to sell naked puts on NVDA again.  It’s been more than 30 days since I took my losses on it and now that the wash rule doesn’t affect me, I’m thinking about getting back in.  I sold at 20 and 22.50 and it’s trading close to 20 right now.  I made the right move by letting my shares get called away so I could take the losses for tax purposes and now am eyeing the August 17.50 naked puts.

I read an interesting article on MarketWatch today that painted a gloomy picture of where the markets are heading based on the charts.  I think he’s on to something which explains my lack of trading.  I’d rather miss a short rally than get spanked too bad on a hard pull back or longer bear market with too much invested and not enough cash ready to put into play at cheaper prices.  If I miss an upward swing, so be it. 

I added another $15,000 to my money market (NPLXX) instead of letting it sit in pure cash.  This brings my total money market to $90,000.  I’m only long VIP, so I needed the cash …

When I first charted the Dow Jones Industrial Average, aka DJIA (ticker: $DJI) this morning I looked at the three month daily chart to see how bad the short term looked.  I missed charting last week, but would have pointed out the trend line of lower highs would need to break before I turned more bullish on the DJIA.  That line was tested on Tuesday and didn’t break.  Instead, on Friday, the trend line of lower lows broke and even closed below this line.  That’s a fairly bearish indicator.  Closing below that trend line on Monday and Tuesday would be very bearish.  In this chart you can see that the 10, 20 and 50 day moving averages are all above the current price.  That’s bearish.  I even went back to check on the 100 and 200 day moving averages and they are well above the current DJIA price.  This looked so gloomy I turned next to a long term chart to see if the story was the same.

Looking for a chart that was more stable I switched to a five year monthly view of the DJIA.  The three month chart above told me to stay on the sidelines a little longer and wait for a better entry point.  The five year monthly chart shows hope for the …

I left the day on Friday thinking we had a long rough road coming for this market.  Now I’m not sure since I charted the Dow Jones Industrial Average (aka DJIA and ticker $DJI).  The DJIA closed the week at the point of two trend lines that could offer some support. 

Aside from the lines that that offered support on Friday, we can’t say we didn’t have warnings from a technical view earlier.  First in mid-May the Williams %R indicator moved below the overbought line, which I’ve pointed out a few times in the past is the point to be concerned.  Not long after that, as the fall continued, the trend line that excluded the absolute lows from March broke, but recovered quickly.  That was when the red flags should have started going up.  The huge move that should’ve shot out the warning flare came at the beginning of last week when the $DJI moved below that same line and traded below again on consecutive days as confirmation and then used that same line as a ceiling.  Once that ceiling hit and held the Dow back from a recovery, the next day issued a horrid spanking with a 395 point fall.

I’ve been holding cash back, waiting for a fall like this and I’m not convinced yet that it’s over, even with those two lines above …

For the first time in my weekly charting series I’ve decided to chart one of the major Oil ETFs, United States Oil Fund LP (AMEX: USO).  Clearly I should’ve done this earlier and possibly could have made some good trades on it. I think everyone is aware of the rise in oil prices.  The questions that remain are how much is it going to affect our economy and when will it ease. (I’m using “USO” and “oil” interchangeably in this article - Note that the price of oil is not equal to the price of USO, but does mirror the movement and USO is easy to trade for those of us who don’t directly trade commodities.)

The best trend line going that we (those who want oil to fall) can hope for is the line of higher lows.  Eventually all stocks and ETFs return to this line and test support.  USO is still 10% above that line giving the USO bears hope of a decent oil correction.  That line of higher lows is also close to the 50 day moving average which was last tested two months ago.  USO also fell below its 10 day moving average on Wednesday and recovered, but Thursday and Friday it couldn’t recover and we saw confirmation closes below that line.  Bears like closes below the …

Last Friday I bought a couple of calls on the S&P 500 ETF, SPY.  SPY is having a very hard time crossing its 10 and 20 day moving averages and staying above it.  It made it above both lines yesterday and today, but both days fell back below it.  Around my lunch break, while SPY was trading at 140.35, I sold both of my call options on SPY and paid $258.50 with commissions.  That gave me a profit of $57.01 for the past week.  That’s a 28% return in one week.  Too bad I only went in with $200.

I’m going to continue to watch SPY and will trade it more often if possible when I see good opportunities like last Friday.  For now, I think the risk to the downside is closer to even with the potential upswing for a near term option.  When I see the risk/reward more lopsided again, I’ll be right back in.  Over time, as I get better and more comfortable with these types of trades, I’ll use more than $200 so the 28% return will actually be something to be happy about on the dollar return too.  I’m not saying I’m upset about netting a $57.01 profit, but admit I can do better.  At least my other naked puts sank in price this week, so I …

I found a good article on charting stocks I thought some of you would like.  You can find it on Investopedia’s site.  They charted AA, siting support at current levels which is what I said it would do when I sold naked puts on it recently. 

Of the other three they chart, CBG and AHS seem interesting to me.  AHS crossed above its 10 day moving average today and if it holds tomorrow I might have to consider naked puts on it.  CBG is at the bottom of its trend line of higher lows and crossed above its 50 day moving average today after spending a couple of days to the bad side of it, but it hit a brick wall when it met up with the 10 and 20 day moving averages.  I’d like to see it cross above 22.50 for a couple of days and then the July 22.50 naked puts might be a decent trade.

I didn’t trade on anything today as I continue to search for the right entry point on various stocks, such as the ones above.  That doesn’t mean I’m not watching, just being cautious.  To trade for the sake of trading can cost you quickly.  My VIP shares I sold covered calls at the June 30 strike are now trading around 36.  I’m considering buying some in my IRA.  …

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 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 …