I charted the S&P 500 ($SPX) after the markets closed on Friday, 8/6/10, when it finished the week at 1,121.64.
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A couple of weeks ago I stated the SPX looked range bound.  Check out the chart I posted then and notice where the SPX topped out this week, even before the jobs data did its damage on the index.  I drew the line within two or three points of the top.  If I had tilted the line a little (as I did in today’s chart) based on the May 7th intraday high as a starting point I would’ve had the top dead on.  Enough bragging about that, I was due for another good call and that line might not have much longer to last based on the way the S&P recovered Friday afternoon.

The July jobs report looked like it would completely ruin the …

July was a very good month for me, as I’m sure it was for all investors who were long stocks.  By the end of July my combined accounts balance was $112,122.50.  I have my equity based assets with Interactive Brokers ($100,777.73) and my debt based positions with TD Ameritrade ($11,344.77).  Quicken was a little off and said my combined balance was $112,293.24, basically due to the difference of what each uses for closing prices at the end of the day (I think), last trade versus current ask.

After finishing June with a combined balance of $102,037.08 and adding $3,000 after the first week of the July I’m pretty happy with my gains.  That gave me a paper gain of $7,085.42 for the month which is in line with what the S&P 500 did for the month and I am taking less risk with less volatility.  It’s not all about what I could do in one month though, I still need to finish the year better than the Dow Jones and the S&P 500 to be completely satisfied.  I’m barely ahead of the Dow for the year, but beating the S&P by a couple of percentage points so far.  That can all change within a couple of days, but I’ll take what …

I charted the Dow Jones Industrial Average (DJIA, $INDU, $DJI) after the index closed for the month on 7/30/10 at 10,465.94.
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The Dow Jones was stopped once again at the top of its trading channel (strike one).  The index made a solid attempt to climb above its 100 day moving average (dma) after cresting its 200 dma, but couldn’t get a full day above the 100 day line before retreating (strike two).  That lead to an intraday break of the 200 dma again, twice (strike three?).  Although the index hasn’t closed below its 200 dma for the past six days those intraday breaks can be a hint of what’s to come. 

The 50 day moving average is around 275 points lower and could be an area of support for the DJIA.  The 50 dma has brief support and resistance in the past six months, but the trading channel might have too much of a pull to the downside …

I’ve waited long enough without covering my UCO shares with calls.  When I finally got around to it this morning I decided to add some more downside exposure at the same time with new naked puts to go with the covered calls.  Until today I couldn’t get myself to accept the premiums for the risk (upside and downside) I was going to accept.  I had been eyeing the $8 strike for puts and $12 strike for calls, but while oil was extending yesterday’s losses I decided I could reduce my calls’ strike to $11.  Worst case on the upside is that oil spikes (bringing UCO with it) and I exit my position with a nice profit and start it all over again.

I had to leg into this position (make two different single trades instead of one single strangle order) since my single order for a strangle wasn’t hitting as fast as I wanted it to.  While UCO was trading at $9.59 I sold 10 UCO September 8 naked puts at $0.30 each and received $292.86 after commissions.  A few minutes later, while UCO was trading at $9.62 I sold 10 UCO September 11 covered calls at $0.30 each and received $292.86 after commissions.  …

I’ve been patient with my little Morgan Stanley (MS) position after I bought 100 shares at $29.00 from an option assignment only to see it dive down below $22.50.  They’ve made a nice comeback and might keep going, but I decided to take some profits while I can.  MS could hit resistance before it gets to $28.00.  On July 21st it made it up to $27.89 before cooling off.  Beyond that I can see another potential speed bump close to $29.00 where it held support this past spring.  I think support (if it even dips again anytime soon) should be around $25.00 and see it highly unlikely to go back below its recent low of $22.41.

With that range in mind I figured an options strangle on MS would be my best move to make.  While MS was trading at $27.42 I placed a limit order for $1.60 and sold one MS September 28 covered call and at $1.02 and one MS September 25 naked put at $0.58.  I received $157.97 after commissions.  If MS closes at the September expiry below $29.58 (call strike plus premiums), but above $25.84 (current price minus premiums) I made the right trade.  If I wasn’t already long 100 shares my floor for …

I charted the S&P 500 ($SPX) after the markets closed on Friday, 7/23/10, when it finished at 1,102.66 for the week.
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The S&P 500 had another strong week this week continuing its rally since the lows on July 1st.  I couldn’t find a trend line (higher highs/lows or lower highs/lows) that looked like it’s still holding true, so I included a chart that allowed more moving averages to see if we can gain some guidance from these indicators.  I did include some horizontal lines that show some of the trading channel tops and bottoms.  The trading channels, the moving averages and Williams %R might be plenty to go on for now.

I noted recently that while a few technical indicators I watch were conflicted Williams %R still told a bullish story.  The same holds true this week although it might be getting long in the tooth soon.  For now it hasn’t given the …

I’m having a fantastic month so far which typically means my luck is about to run out.  (The IB portion of my account got above $100k today after finishing June just above $90k, plus a $3,000 deposit I sent in early this month.)  Before anyone says anything, I know that’s not an actual scientific/reasonable way to look at investing, but it does seem to go that way often.  Two steps forward and one step back is a healthy market in my opinion and we seem to be on our second quick step now.

I sell naked puts because I believe the markets will go up over time.  Dips and corrections are going to happen and with the markets in a current rally that’s getting close to the SPX 200 day moving average I think we might be due for another dip and increase in volatility.  If I’m wrong my long positions and other naked puts will continue to increase my account balance.  If I’m right about another dip on the horizon (within a few weeks if not sooner) my VXX options will become profitable for me.

With that belief, when VXX was trading at $23.58 I sold three September 20 naked puts at …

I charted VXX this afternoon a little after 3:00 pm when it was trading at $26.74.  I’ve mentioned VXX a couple of times and have a two August 24 naked puts I’m sitting on.  I’m considering adding some more at lower strikes.  I’ve been sprinkling in a few 21-23 strike puts for some clients and think it might be worth me adding more for my own account too. 

VXX has been following a good trend line of support for the past few months and I don’t see volatility dropping much more in the near term.  Of course if it does, that means the rest of our naked puts will improve for us, so it’s a nice hedge and can just be profitable on its own.  Although VXX has had a few spikes here and there, the $31-32 area looks like it is a good exit point.  I’ll be quite happy just taking in the premiums from my puts while I wait for a deeper fall.

Keep in mind that VXX could just as quickly drop below $20 and stay for a while, so watch this trend line and be ready to exit or have your puts assigned.

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I charted the Dow Jones Industrial Average ($INDU, DJIA, $DJI) after the markets closed on Friday, 7/16/10, after it finished the week at 10,097.90.
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This past week proved the trading channel is still in charge with resistance just below 10,500 and that the 200 day moving average (dma) won’t roll over too easily.  My DJIA chart from two weeks ago was almost dead on.  I said I expected a bounce, but that it would hit resistance after about 500-700 points.  We saw the DJIA go just above that, but then it raced back into my range quickly the past couple of days.  The upper trend line I drew two weeks ago actually broke to new highs, so I’ve drawn a different one with a less steep slope this week.  I used two blue horizontal lines to show the majority of the trading channel, although the index has …