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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

Wednesday, August 25, 2010

Bad news no sell off

DJIA 10060.06 +19.61 VIX 26.70 -.76 10 year 2.53 -.04 30 year 3.57 -.06
Gold 1241.30 +8.30 Oil 72.52 -.29 USD 83.00 -.23
Days to option expiration 17

Economic Conditions: Negative -10

Mikey OB/OS index 53, Neutral
Mikey Confidence Index (MCI) 34, Traders: negative
Ratio Put Premiums/Call Premium 1.06 Elevated
% Advisory Service Bulls 36.7 Bears 31.1 Moderately Bullish
US Mutual Funds cash position 3.5% Low cash (high 6.2% Low 3.3%)
IBD : Confirmed downtrend as of 8/24
Numbers are from the prior day close

Mikey Power Index (MPI)Uptrend Above 60, Sell below 50, Downtrend below 40

Stocks 28 Bonds 86 Emerging Mkts 19 China 27 Brazil 27
Oil 9 Nat Gas 15 Copper 51 Gold 58 Silver 57
USD 62 Aussie 30 Euro 19 Brit Pd 37

Short ETF SCORE 935
DXD 70 DZZ 37 ZSL 38 DUG 76 EDZ 74 SMN 63 SKF 76 SRS 76 SZK 88
QID 83 SCO 87 RXD 81 TBT 16 SDP 70

Long ETF SCORE 543
DDM 32 UGL 53 AGQ 64 DIG 22 EDC 24 UYM 43 UYG 28 URE 26 UGE 65 QLD 26 UCO 9 RXL 27 UBT 82 UPW 32
Total Score -392(Positive number indicates uptrend)

Long Term Opinions:

Bonds: Major long term top forming
Stocks: Secondary Bear market rally over, downtrend in progress
Gold: Primary Top Forming
Oil Secondary: Bear market rally complete, downtrend in progress
Commodities: Bear Market Rally ending
Real Estate: Bottoming no uptrend
US Dollar: Major long term Bottom complete, uptrend in progress
Emerging Markets: Bear Market Rally ending
Economy: Double dip coming

Summary: Stocks, Emerging Markets, Oil, Euro, Aussie, Tech, Utilities, Real estate, Banks have weak MPI power numbers below 40. ETF score of -392 still expanding indicating downtrend is in place. Mikey OB/OS index is at 53 which is still not oversold indicating more downside is available for this move. Put premiums are expanding and are over 1 and the MCI is at a negative 34. This may mean that some short term rally is near.

Economic numbers are morose with existing housing numbers hitting all time lows. The economy is dead in the water. Corporations still have cash but their business are slowing and they are unwilling to hire. The Fed meets at Jackson hole lets see what comes out of that.

Mikey
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