I charted the past three months of daily prices for the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after the index closed at 12,849.59 on Friday, April 13, 2012.

The moving averages have been the story lately for the large cap index.  Last week I pointed out the S&P 500 was headed for the 10/20 day moving average (dma) bearish crossover.  The Dow followed the same path too.  I didn’t show it on this chart, but it happened on Monday, the day after the index closed below the 20 dma.  That sent the DJIA below previous the horizontal support line around 13,000 and opened the flood gates.  The real technical trigger for the big sell off on Tuesday came from Monday’s close below the 50 dma.  This was the demarcation line for many traders and when the Dow couldn’t climb back above it by the end of trading Monday, nothing was left to do, but to sell.

Support surfaced when the short trend line of lower lows came back into play.  This equaled a 4.4% drop from the …

I was ready to back off some market exposure after the markets were teetering last week on various technical indicators.  The jobs report was enough for me to want to take some profits early.  I’m not saying that the single data point was enough to make me want to abandon ship, but the break below the 10 and 20 day moving averages and breaks in the William %R indicator and a couple of trend lines did add up enough for me to draw back some.

While MDY was trading at $176.65 I bought to close one MDY April $174 put for $1.60 and paid $160.27 with commissions.  I sold this MDY put in February when MDY was trading at $179.29 for net $368.97.  As MDY lost money ($2.64), I made money ($208.70).  That’s why I use options.  Even when you don’t time your entry or exit exactly right you can still prosper.

While SPY was trading at $138.28 I bought to close one SPY $137 put for $1.05 and paid $105.58 with commissions.  I sold this SPY put in February also.  SPY was trading at $136.12 at the time and …

This S&P 500 ($SPX) chart shows the past six months of daily prices after the index finished the week at 1,398.08 on Thursday April 5, 2012.

Thursday’s close left the SPX in a precarious position.  It remained above its four month trend line of higher lows, but closed below its 10 and 20 day moving averages (dma).  A the same time the Williams %R indicator fell below the overbought area for the 14 and 28 day periods.  The 50 dma and the Williams %R 56 day indicator have not given in yet.  That could change as early as Monday when stocks resume trading after a disappointing employment report on Friday when US markets were closed for the holiday.

Futures traded for an hour after the data was released and indicate a much lower open after the weekend.  Such a lower open will pull the 10 dma lower quicker than the 20 dma falls.  Short based moving averages move quicker than longer ones and will lead the SPX chart to show a bearish 10/20 dma crossover within days …

March was a much better month for stocks than I expected and because I wasn’t bullish enough I trailed the market and lost some ground on my comparisons with the indexes for year to date returns again.  My lack of stupid moves is still working for me with respect to not taking big losses, but I’m also not taking enough chances to keep up.  There is a middle ground I need to find still.  Then again, if we had seen a correction in March I would’ve looked very smart for stepping down some on my exposure.  It might not happen in April, but we will see another correction eventually and hopefully I haven’t given up on my cautionary plays by then.

I ended March with a balance of $108,988.28 after finishing February with a balance of $108,103.65.   That gave me a gain of $884.63 on paper for March and a realized gain for the month of $254.04.  That gain is not so bad considering I took a realized loss on my DSX shares of $1,200.04.  I received only $1.12 dividends in March.  Quicken reported that I have $108,965.70, close to what I actually have.

For the past couple of months I’ve run the numbers on what it would take me to …

I’ve been much more heavily allocated towards mid-cap and large-cap stocks recently and missed some of the great run small caps have had.  I don’t think they are done moving higher yet and decided to add a little more exposure with a new IWM naked put this afternoon.  While IWM was trading at $83.75 I sold one IWM May $84 naked put for $2.64 and received $263.41 after commissions.  I sold this one slightly in the money to give me a little more upside potential, but didn’t want to go too deep in the money because the return on my investment is good enough for my needs the way it is.

I have 3.24% upside with this trade with just under seven weeks remaining before they expire.  That’s 24.4% annualized.  Even with such good upside potential, I still have a cushion of 2.85% before I take a loss.  The way small caps can move, that cushion can evaporate in just a couple of days, but the risk is worth the potential reward for me.

This trade pulls me up to 100% invested, so I’m not overextending myself at all yet.  In fact, I still need to add some more exposure before I …

Along with a group of other top North American financial bloggers, I through my hat in the ring again to see who could come up with the best stock picks for 2012.  We agreed to pick four stocks or ETFs and hold them for the entire year with no changes allowed.  Regular My Trader’s Journal readers know I’m not much of a buy and hold investor, so I added in how I’d play this contest if options were allowed also.  The results are not based on options, but on pure growth and dividends from our four picks.

I barely made it into the top half of the group through the first quarter.  I got stung by Google (GOOG) for a loss, but the rest have been OK and I doubt GOOG will stay down too long.  Bonds fell as expected and my leverage inverse pick (TBT) pick did well, but bonds have recovered some since their low and brought TBT lower again.  I think TBT has more room to rally as bonds will likely fall further through the rest of the year.  Small caps (UWM) hasn’t been a disappointment.  I’m up 25% on that pick alone. …

I charted the past six months of daily prices for the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after the index closed at 13,212.04 on Friday, March 30, 2012.

The trend lines of support and resistance that have been in place for the past six months are still holding true, but are inching their way towards a convergence within the next couple of months.  When that happens one side is forced to give in and it is usually the trend line of higher lows.  This means the Dow is at an interesting place again as the springtime selling season is knocking at our doors.

The Dow is at an interesting place right now.  It just bounced off of its lower trend line and is on a path towards the upper trend line again, but stopped on Friday at a new little line that could end up being resistance.  Friday was the first real test of this line, so next week will show if it was a coincidence or not.  This descending line comes from high seen in …

This S&P 500 ($SPX) chart shows the past four months of daily prices after the index finished the week at 1,397.11 on Friday, March 23, 2012.

The S&P 500 made yet another trip to the top of its trading range, but found resistance at the trend line of higher highs.  As has been the case since this trading channel began, hitting this trend line has triggered a break in buying.  The trick every time is seeing if that is the last touch to the line before a real correction begins or if it is just another breather before the bulls catch another wind.

A couple of weeks ago the middle trend line I drew that marks the line of higher lows broke.  That looked like the start of a bigger correction, but buyers resurfaced after the 20 day moving average (dma) broke support for a single day.  The index took only one more day after that to make it back above the 20 dma again.  That bounce took the collection of 500 stocks back to the upper …

Those of you who have been reading My Trader’s Journal for a while know that I have a hard time staying out of Qualcomm (QCOM) for very long.  As many times as I’ve been in and out of it, I think I might have even done better if I had just bought and held it from when I listed it as one of my positions in my first blog post in April 2007.  Back then I was short a put with a $40 strike.  On Monday of this week QCOM hit $67.00 after Barron’s had a bullish article on it, as the do every few months it seems.  As is common with articles like this, the stock gets a pop higher and then cools off and drifts lower for a few days.  Although I’ve been following it for years I couldn’t bring myself to get back in yet again until today.  I wanted to wait for some of the Barron’s bounce to come out of the stock, but also wanted it a little farther off its trend line of higher lows.

While QCOM was trading at $66.25 I sold one QCOM $67.50 May naked put …