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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

Friday, August 20, 2010

Quantative easing begins as refies rise and stocks and commodities sink

DJIA 10213.62 -57.59 VIX 25.49 -.95 10 year 2.62 30 year 3.66
Gold 1229.80 -5.60 Oil 72.95 -.85 USD 83.04
Days to option expiration 0

Economic Conditions: Negative -10.3

Mikey OB/OS index Elevated ---63 (80=OB 20=OS)
Mikey Confidence Index (Traders: Neutral) 51
Ratio Put Premiums/Call Premium Elevated .89
% 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%)
Numbers are from the prior day close

Mikey Power Index (MPI)
BUY 60> SELL 50< Short 40

Stocks 38 Bonds 82 Emerging Mkts 33 China 42 Brazil 44
Oil 33 Nat Gas 12 Copper 46 Gold 60 Silver 50
USD 66 Aussie 40 Euro 30 Brit Pd 41

Short ETF SCORE 755
DXD 65 DZZ 33 ZSL 47 DUG 58 EDZ 63 SMN 45 SKF 67 SRS 70 SZK 81
QID 72 SCO 63 RXD 55 TBT 20 SDP 61

Long ETF SCORE 649
DDM 36 UGL 57 AGQ 47 DIG 36 EDC 34 UYM 57 UYG 37 URE 32 UGE 76
QLD 30 UCO 36 RXL 63 UBT 79 UPW 37
Total Score -146(Positive number indicates uptrend)

Summary: Stocks, Emerging Markets, Oil, Euro, Aussie, Tech, Utilities, Real estate, Banks have weak MPI power numbers below 40.

Gold, US dollar, and Bonds have strong MPI power numbers above 60.

Long Term Opinions:

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


Refie demand is rising this is the first attempt by the Fed to help the consumer. Refies rose 13%. The highest since May 2009. Purchase apps fell 3.44%. They have taken the last year to provide liquidity to the banks and corporations and now the process is beginning for the homeowner with equity to do the same. The problem is that alot of who could have qualified in early 09 can not do so today. Too little too late for the economy at this time. We have a long way to fall to get back into balance.

Mikey
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