Posting Times

Posts will be between 8:30 PM to 10:00 PM PST
Mikey's Short Term Trading Rules

1) Make up a list of stocks, commodities or ETF's to trade. This list should be names that have good earnings and high relative strength.
2) Monitor this list and throw out the weaker names
3) Buy only stocks or ETF's that are intermediate and daily up (green) and the market is Daily and intermediate term up (green)
4) Buy pullbacks on these stocks to the 20 and 50 day averages
Usually you get 4 to 6 20 day pullback buys and 2 or 3 50 day pullback buys in an intermediate term trend
5) More agressive traders can buy the 7 day average in the first 3 to 8 weeks of the uptrend.
6) Buy pullbacks not runups. A buy should not be easy or exciting but difficult and somewhat scary. DO NOT CHASE
7) Place stop at 5% below the buy price. Do not remove
8) Sell 3 to 5 days after the stock price takes out its most recent 2 week high with at least 15% gains
9) Uptrends that are 12 weeks or more may be ripe for a correction. The first 2 pullbacks to the 50 day are usually safe.
Intermediate term uptrends and downtrends generally last from 8 to 16 weeks with 12 weeks being the norm.
10) Shorting is a viable strategy in downtrends for experienced traders only. In general, reverse the above rules
11) Tweet Mikey @themarketshadow with questions or ideas

Friday, February 19, 2010

Fed Raises Discount rate...Happy Feb options expirations day

DJIA 10404 +12.17 SPX 1109 +2.74 Russ2000 631.37 +2.36 NASDAQ 2244.76 +3.05 VIX 20.09 -.59 Oil VIX 34.07 +.71

Dollar Index 80.68 +.29 Aussie Dollar(FXA) 89.69 -.0054 EURO(FXE)1.3586 +.0056

TLT(20yrGov Bonds) 89.36 +.39 IEF (7-10Gov Bonds)89.50 -.01

XLK (Tech)21.85 -.03 XLE (Oil Index)57.37 +.23 XLF (Finan Index)14.47 +.03
XHB Homebuilders Index)16.06 +.02 GDX (Gold Miners Index)44.97 -.09 XLB (BasicMatIndex) 32.38 +.27

EEM(Emerging Markets) 39.45 FXI(China Index) 39.18 IEV(Europe350)36.48 -.07 (Brazil) 69.98 +.14

Gold 1120.90 +2.20 Silver 16.32 +.12 Copper 3.368 +.0625 Oil 79.78 +.72 RBOB (Whsl Gas)2.0851 +.0159 Nat Gas 5.049 -.12



The Fed raised the Discount rate on Thursday and the reaction from their pimps was predictable:

Forget the cosmetic move of raising the discount rate—the day the Federal Reserve really decides to start putting the brakes on growth could actually be a happy occasion for the stock market.

Raising interest rates and stemming the flow of liquidity to the economy might otherwise be considered a barrier for stock market growth, but many investors are in fact eagerly anticipating that the move will add another level to investor confidence.

That is laughable and I can rant on that statement or just laugh. I will say that the emperor has no clothes. The Fed is starting to walk away from the markets and this is the first move. I heard today that a record 15.02% all loans are delinquent but first time delinquencies fell to 3.63%. The pimps tell us that it is a sign that the crisis may be ending. The fact that the FED raised the discount rate is supposed to tell us that the economy is OK. The Fed raising the rates has zero impact on anything and is only a symbolic ploy for the spin misters to use.

The chart below shows that we have rallied to the first breakdown area on January 21st. The breakdown at that point was at about 10400. I mentioned that we would need to off that breakdown and this move will do this that. They now need to sell the idea that the correction is over. Notice that the MACD (lower indicator) dropped below zero and is now turning up and is nearing the zero line.. The DJIA is now breaking above the 50 day average. The shorts have to respect that and will cover.



Notice that every new high the chart made on the way up reversed and sold off toward
the 50 day average. In each case, the MACD remained above the zero line. The 20 day (white line) fell but remained above the 50 day (red line) and the 50 day average continued to rise. The most recent hit took the MACD below that line and the 20 crossed below the 50 and the 50 day average rolled over. The 20 day is now rising toward the 50. This is the reverse of the uptrend so something has changed. The story is still the same but the price is acting differently.

Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)