Tax Season 03/25/12

Just passed another birthday and looking back wonder how quickly the years have gone by. There is a lot I am thankful for; my family being the first and foremost and decent health being the second. Sure, I have had my trials and tribulations along the way but that is life, isn’t it? I have learned more from my mistakes although I try to tell myself to also learn from the good stuff. Stock trading, managing my portfolio would never have happened if I had not lost so much money in 2001-2003 when I was totally ignorant about the markets. Out of those losses came the learning of a new field, having taught myself technical analysis as well as options. I have done well by the goals I set for myself. I wanted to be able to protect my money first, and grow it gradually without losing money any year. So far that is where we are and after weathering 2008 I feel I can accomplish that in the future also. I have learned to listen to the voice of the market and take its cues (most of the time!).

It is tax season now. Always nice to have profits and gains so that you can pay your taxes. Working at a decent job gives you a more certain income than trading. Everyone dreams of trading for a living but that is possible for the very few. I am navigating our family’s retirement portfolio and the decisions I make will impact our future. This year has been nicely positive.

Last week I saw an overbought situation. I brought my hedges up to closer to the money. As the market dropped, these hedges have gained value and Thursday night I started slowly selling a small part of the hedges. I am expecting the market to thrust up again and maybe in April that may be the last thrust up before we see some serious corrections. Markets don’t just climb up forever. Maybe it will be renewed fear about running into the debt ceiling or the political fights that are ahead in the near horizon but my plan is to ease back the throttle mid-April.

Let us see what the charts say. Looking at the chart on DIA (Dow Jones 30) I see that my primary signal (larger blue arrow pointing up) says we are in an uptrend but in a pullback. My secondary signal (smaller arrow pointing up) is saying buy into the dip. I think I will continue to reduce my hedge; which will be like cutting the shackles to enable the upside movement.