Covered Calls for Fun & Income

April 5, 2009

Where Are We Headed?

Filed under: Covered Calls — Tags: , , , , , — Jeff @ 10:21 AM

I don’t know, but I can give you my unsolicited and unprofessional opinion – which in reality is just as good as anyone else’s.

I was looking at the major indexes (DOW, SP 500, NASDAQ 100, RU 2000 and SP 400) on a weekly chart this morning – trying to figure out where we are headed from a technical perspective. Almost all of the major indexes were very Bearish in February and the first week of March, with the exception of the NASDAQ 100, which did not set a new low like the others but hit support at 1030 and rebounded. The indexes are so similar you could overlay one on the other and not tell the difference. For all of them, the last high was the week of 1/9/09, which could provide resistance.

I suspect there could be some ‘profit taking’ this week, but the overall trend appears to be up – 4 straight weeks’ closing up is nothing to sneeze at.

How does this apply to our Covered Calls? I personally like down days, as long as it’s not more than 1%-1.5% on the indexes. This provides the opportunity to buy low in expectation of a rebound. My personal choice would be to stick with the NASDAQ 100 CallWriter list and continue to look for decent downside protection. Remember, I have enough cash for one more trade.

(NOTE: I updated my Closed 2009 page – you may want to check it out)

– Jeff

“Nobody in the game of football should be called a genius. A genius is somebody like Norman Einstein.” Joe Theismann, Former quarterback

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