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March 2014 review

Up LadderMarkets regained the upward trend momentum as it confirmed its trend continuation last Friday. What does that mean? It is simple, the trend will continue and it will make sense to be buying any dips should they occur.

In this post I would like to review my view of the market in the past and my April 2014 outlook, but most importantly to review the results of my investing and trading.

In the previous post from February I revised my goals and the way I invest my money. I still will focus on dividend investing, but not in all of my accounts as I did before. I am shaping my strategy and tweaking it to make me comfortable and satisfy my way of investing.

I still use dividend growth strategy as my main strategy in my ROTH IRA account and Motif Investing account. In my TD account, however, I shifted my focus on options trading as a main strategy and dividend investing as a supportive strategy. That means, that I will invest a percentage of proceeds from options trading into dividend stocks and use the rest reinvesting into options contracts. Read my revised strategy in my previous post
February 2014 progress, goal changes, and TD portfolio vs. S&P500“.

March 2014 market review

If you take a look at the latest market chart (SPY below) you will see a nice consolidation. What is it I see in the chart? I look at a few indicators:
 

  • Bollinger Bands
  • 10 day MA vs. 20 day MA
  • Chaikin Money Flow

 

Let’s start with the Bollinger Bands. This indicator will not tell you, which direction the market will go, but it will tell you what momentum the market is experiencing. The bands work like a rubber band. They contract and expand. Look at the chart. When you see them contracted, you may expect a dramatic move and a strong expansion of the bands. It will not tell you which direction the trend will go. It will just tell you that it will happen sooner or later.

When I see 10 day MA crossing above (or below) 20 day MA, then it is a moment when the trend reversal or breakthrough is going to occur. But, in order to avoid a false signal, the 20 day MA must be also trending up (for upward trend, or down for downward trend). If you check the chart below, you will see, that 20 day MA trend was moving up when it was crossed by 10 day MA.

Chaikin Money Flow indicates money flow into or from the stock. Although the flow is still negative, you can see a reversal in it as well. We may expect more money flowing into market which would support the trend.

SPY

Janet Yellen backing off

As many were expecting, myself included, FED’s (empty) chair (woman) is already backing off from her boasted proclamations about the stimulus and she announced that the interest rates will stay low longer than she originally claimed. To me, this is a confirmation of what Peter Schiff was saying all the long, that Yellen has no clue of what is happening and that she is just a Bernanke 2.0. She has no exit strategy, just pretends.

So, the new “trend” in FED’s policy boosted stocks more up and it looks like we have a clear path for new highs.

Earnings expectation

I do not have much to say about this item. All I could find is that Alcoa (AA), which is always the first to start reporting was recently also breaking thru upwards in expectation of great earnings season. It will be fun to see if it comes true. Alcoa has been downgraded many times last year by analysts, so if it beats their expectation this time, we may expect that this would boost the entire market.

April 2014 outlook

Historically April is considered as a good month for markets. Out of 19 years, Dow was up for 15 years. My indicators I watch are turning positive, so, I expect April to be a good month and our accounts should collect more gains. During last month I was increasing my cash reserves up to 30% (although not all in all of my accounts as this was a lot slower process this time than I expected). In some of my accounts I increased my cash reserves to 20%, but for April 2014 I will slightly use them down to 10 – 15% only as I do not see a need to keep reserves higher.

Remember that besides dividend growth investing I also actively trade naked options. In order to be able to manage the risk, I like to keep cash reserves which would allow me to roll contracts up and down as needed to avoid assignment.

March 2014 results

Although March 2014 was choppy and fear index I like to watch dropped down to 34 points I made money.

I had nice dividend and options premium income during this past month. Here are some numbers (TD account only):

 

January 2014 premiums: $156.10 (1.55%)
February 2014 premiums: $139.26 (1.38%)
March 2014 premiums: $746.62 (7.41%)
   
January 2014 dividends: $25.87 (0.26%)
February 2014 dividends: $167.02 (1.66%)
March 2014 dividends: $68.77 (0.68%)
   
Total 2014 income: $1,303.64 (12.94%)
2014 unrealized premiums: $926.00 (9.19%)
   
Account balance: $12,418.73 (23.30%)

As you can see from the table above March 2014 was a great month to me. What about you? How was your March 2014 and the entire year so far? Post a link to your website or write down your results to encourage other investors!

Have a great April in the markets!
 
 





4 Responses to “March 2014 review”

  1. Marvin says:

    Crushing it with the premiums this month!

  2. You are doing great this year. Keep it up! and congrats on all the passive income :)

    best wishes



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